'Procedural issues' delay Spicejet's ATF import plan

Mumbai: The low-cost carrier Spicejet, which was the first to get permission to directly import aviation fuel and planned to start doing so by last month, today said its plans were stuck in a procedural maze and hoped to start imports only by the end this quarter.

“We are done with our part. But some procedural delays are holding us back from going ahead and start importing aviation turbine fuel (ATF),” said Spicejet chief executive Niel Mills.

The Chennai-based carrier, promoted by media baron Kalanithi Maran, was the first airline to apply for a direct import licence from the government after it was allowed in February.

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[caption id=“attachment_404379” align=“alignleft” width=“380”]  ATF price eating into Spicejet profits. AFP[/caption]

The second largest no-frills carrier with 18.6 percent market share, which had reported a surprise profit of Rs 64 cr in the June quarter, got the DGFT nod to directly buy ATF in May and the airline had said that it would begin shipping in fuel by mid-July.

When asked as to when he hopes to start imports, Mills said, “Hopefully towards the end of this quarter. It is a complicated issue but not insurmountable. I have done it in the past elsewhere and I will do it here too but it is taking some time, a bit more than I figured out.”

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After being in the red for five consecutive quarters, Spicejet had flown back into profitability with a net income of Rs 56 crore in the June quarter as against a loss of Rs 71.96 crore a year ago on the back of significant growth in sales and better yields.

The Chennai-based carrier also posted 51 percent growth in sales at Rs 1,406.74 crore in the April-June quarter compared to Rs 930.75 crore y-o-y driven by better seat factor that rose to 80.3 percent from 78.9 percent.

When asked whether the delay is from the aviation ministry or the commerce ministry, he refused to answer, saying, “Let me not answer you that.”

Lamenting the skewed tax structure of ATF, Mills said, “Nearly half of my cost is on fuel, which has a 24 percent, on average, tax on it. Such high taxes happen nowhere else in the world.”

Last fiscal, fuel cost for the airline stood at Rs 2,200 crore, 24 percent of which comprised taxes. The state level taxes on ATF varies from four percent to 32 percent in the country.

Denouncing the recent 348 percent spike in airport fees by the Delhi airport, he said nobody can take in such a huge increase. The airlines are already bleeding and this increase will only further compound their woes, he said, adding the biggest burden as a result of this irrational decision is on the public who will have to cough up more to fly.

An airline source said Spicejet has seen its monthly airport bill jumping to Rs 20 crore in Delhi alone.

The operator of the Delhi T3 effected a massive 346 percent hike in airport charges in May.

On whether the airline is looking for more global routes, Mills answered in the affirmative, saying, “I have already applied for some new destinations in South East Asia, apart from the CIS (confederation of Independent States) markets. But I cannot give the details as I am yet to hear from the

government on my proposal.”

Last month, the airline said it would launch operations to China, Riyadh, Mali, and Bangkok. The airline currently has a fleet of 47 aircraft and operates over 279 daily flights to 34 domestic destinations and three international destinations of Kathmandu and Colombo and Kabul.

PTI