The direct import of aviation turbine fuel (ATF) will help passenger carriers cut down operational cost, but is unlikely to lower air fares, thanks to heavy losses. However, the lower operational cost will slash losses and attract foreign investment. “Direct import of ATF could help reduce airline operating costs by anywhere between five and eight per cent,” said Amber Dubey, Director-Aviation, KPMG. “This is on account of reduced sales tax but factoring in higher import duties, infrastructure and transportation charges to oil companies and the entry taxes that state governments may impose.”
Others expect cost savings to be slightly higher. “There will be huge cost savings in the region of 10-15 per cent,” said Dhiraj Mathur, Executive Director, PricewaterhouseCoopers. “But, the airlines will still have to pay the oil companies. The cost savings will benefit the bottom line of airline companies, however, it may not bring them back to profits immediately as interest cost pinches them,” he added, according to a report by The Financial Express. But, this cost saving won’t reflect in lower fares. “We expect the cost saving to be utilised in paring the huge debt burden on the airlines,” Dubey added. “In the short term, we may not see the trickledown effect of re
Click here to see the original article>Others expect cost savings to be slightly higher. “There will be huge cost savings in the region of 10-15 per cent,” said Dhiraj Mathur, Executive Director, PricewaterhouseCoopers. “But, the airlines will still have to pay the oil companies. The cost savings will benefit the bottom line of airline companies, however, it may not bring them back to profits immediately as interest cost pinches them,” he added, according to a report by The Financial Express. But, this cost saving won’t reflect in lower fares. “We expect the cost saving to be utilised in paring the huge debt burden on the airlines,” Dubey added. “In the short term, we may not see the trickledown effect of re