NEW
DELHI: State-owned Air India will gain Rs 500 crore a year from
higher discounts on jet fuel as the debt-laden carrier has agreed to the oil
ministry's demand of clearing past bills of Rs 4,235 crore by April next year
and buy 80% of its fuel from Indian
Oil CorporationBSE 1.79 % ( IOCBSE 1.79 %).
At present, Air India gets a discount of a little over Rs 2,000/kilolitre of jet fuel, or ATF (aviation turbine fuel), whereas Jet AirwaysBSE 0.00 %, for instance gets double that amount at Rs 5,000/kilolitre. Foreign carrierLufthansa has a bigger discount at Rs 8,000/kilolitre, according to sources in the aviation ministry.
"We're talking to the oil ministry and they are ready to give us maximum industry discounts starting February, provided Air India agrees to buying 80% of it's fuel from the Indian Oil Corporation (IOC) without a tender process," a senior official from the aviation ministry said requesting anonymity.
In addition, officials at the oil and petroleum ministry say that it has been decided that state oil firms will give discounts to Air India at par with private airlines provided the state carrier gives a written undertaking to pay dues of oil companies (Rs 4,235 crore) in a time bound manner.
"Pending dues will be cleared by April 2014, in our assessment as we receive money from the government," the official from the aviation ministry added. Air India's fuel bills this April are expected to cross last fiscal's Rs 8,000 crore, according to senior AI executives.
Oil Minister Veerappa Moily took the decision last month after Civil Aviation Minister Ajit Singh raised the issue of discrimination. Air India has not been a profitable entity ever since its domestic (erstwhile Indian Airlines) and international (Air India) operations were merged in 2007. It has a colossal debt of Rs 47,000 crore with accumulated losses of Rs 20,300 crore.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/air-india-to-save-rs-500-cr-by-clearing-bills-sourcing-80-atf-from-ioc/articleshow/17919013.cmsAt present, Air India gets a discount of a little over Rs 2,000/kilolitre of jet fuel, or ATF (aviation turbine fuel), whereas Jet AirwaysBSE 0.00 %, for instance gets double that amount at Rs 5,000/kilolitre. Foreign carrierLufthansa has a bigger discount at Rs 8,000/kilolitre, according to sources in the aviation ministry.
"We're talking to the oil ministry and they are ready to give us maximum industry discounts starting February, provided Air India agrees to buying 80% of it's fuel from the Indian Oil Corporation (IOC) without a tender process," a senior official from the aviation ministry said requesting anonymity.
In addition, officials at the oil and petroleum ministry say that it has been decided that state oil firms will give discounts to Air India at par with private airlines provided the state carrier gives a written undertaking to pay dues of oil companies (Rs 4,235 crore) in a time bound manner.
"Pending dues will be cleared by April 2014, in our assessment as we receive money from the government," the official from the aviation ministry added. Air India's fuel bills this April are expected to cross last fiscal's Rs 8,000 crore, according to senior AI executives.
Oil Minister Veerappa Moily took the decision last month after Civil Aviation Minister Ajit Singh raised the issue of discrimination. Air India has not been a profitable entity ever since its domestic (erstwhile Indian Airlines) and international (Air India) operations were merged in 2007. It has a colossal debt of Rs 47,000 crore with accumulated losses of Rs 20,300 crore.
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