Let there be cheaper jet fuel…

Airlines in India have continuously blamed the price of jet fuel for their losses. And with Singapore Airlines latest quarterly results showing a 53% drop in profits on the back of high jet fuel prices, I’d sure believe them now!

Aviation fuel taxes are a state subject in India, and some states charge up to 40% tax on jet fuel, considering it a luxury to fly and making it pricier. That, added to the high price of fuel already, took airlines to the brink. Kingfisher Airlines, in the throes of pain, asked for a concession from the government to be able to buy and import its own jetfuel from outside India. Looks like the politicos decided to have some fun with the airlines and after dragging their feet, did decide to go ahead and give the permission a few months down the line. But this was not going to be an advantage Kingfisher. It went to everyone in India. Catch phrase? Everyone got to import fuel individually, not as a group of airlines.

Now, the airlines have a go ahead to buy fuel from abroad, but no one seemed to have figured, where would they get the money to put up those tankers and hosepipes at the airport! India has about 100 airports currently operational, some with a few departures everyday, and some with thousands. And the infrastructure is needed everywhere. It seems talks are now getting in place with Reliance Industries, which is one of India’s private refiners. But even they have only 27 stations where they can provide fueling solutions to airlines.

Lets see which way this plays out. I suspect this whole process will be much ado about nothing.

Leave a Reply

Your email address will not be published. Required fields are marked *