If the Federation of Indian Aviation has its way, each domestic airline could get aviation turbine fuel (ATF) at about 25% less than the current price.

Highly placed official sources said the FIA has sought permission from the Directorate General of Foreign Trade (DGFT) to directly import ATF for domestic carriers.

ATF to cost less, but airlines won't cut fares

If allowed, such a move would mean that the airlines' dependence on oil marketing companies for ATF would cease. And ATF would become at least 25% cheaper since many levies including the state-specific sales tax would no longer form part of the ATF price. Sales tax across states varies from 20-35% at present.

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Sources said that in case such a move is allowed, the operating costs of airlines could drop by as much as 10% straight away since ATF currently accounts for about 40% of overall operating costs.

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But, is reduction in ATF pricing really this simple?

Sources indicated that state governments and oil marketing companies are expected to put up stiff resistance to any such move although under the present policy, any end user of ATF is allowed to import it.

Then, it would be near impossible to monitor whether the ATF so imported is actually being used by the airlines and is not diverted. Sources said the FIA has already tied up with airport operators, beginning with Mumbai, for getting the required ATF import and storage infrastructure in place.

Though international crude prices have been sliding off late, ATF has seen several peaks over the last few months. As on September one this year, ATF ruled at Rs 61.83 per litre at Mumbai against Rs 39.44 per litre in the same month last year. In August this year, ATF was ruling at 73.67 per litre, the highest price since

January 2005.