News Release Details
Nacil issues mega fuel tender to reduce cost
New Delhi 08-Oct-2007
The National Aviation Company of India Ltd (Nacil), a company formed after the merger of Air India and Indian Airlines, has invited tender for the supply of 9.5 million barrels (400 million US gallons) of jet fuel (ATF) worth Rs 3,500 crore. This would be an annual requirements for Nacil (including flights operated under all sign AI and IC), Air India Chambers Ltd (brand name Air India Express, a wholly owned subsidiary of Nacil), and Airline Allied Services Ltd (brand name Alliance Air, another wholly owned subsidiary of Nacil). The bidders have been asked tosubmittheirbidsonNovember l9. Nacil sources told FE "The jet fuel would be uplifted for operations by Nacil and its subsidiaries in India. Of the total fuel consumed, 50% of its requirements is uplifted abroad and the tender that is now been issued is only for Indian operations. The fuel bill of Nacil and its subsidiaries is estimated to be nearly Rs 7,000 crore in 2007-08. Through its joint procurement strategy Nacil is aiming at retching economies of scale in its overall operations." Fuel constitutes nearly one third of the operating expenses of the Nacil at any variations in its prices and it’s likely to significantly impact the profit ability of the airline. 'The airline expects keen competition from public and private sector companies which would significantly contribute to lowering the jet fuel cost as its is expected that the companies may offer nearly upto 10% discount to get the contract," sources said. The airline is in the process of heading its fuel uplifts. The erstwhile Air India had already hedged 10% of its international fuel uplifts when the fuel prices were around $60 a barrel. However, these hedging operations were not continued beyond a particular time when fuel prices started falling. However, the airline would now be forced to rethink its risk management strategies in the light of the stiff price in fuel cost per barrel which is worrying the aviation industry in general. Nacil sources mentioned that the airline is also taking up with various state governments for the reduction of sales tax on domestic fuel uplifts which ranges from nearly 4% to30%.
New Delhi 08-Oct-2007
The National Aviation Company of India Ltd (Nacil), a company formed after the merger of Air India and Indian Airlines, has invited tender for the supply of 9.5 million barrels (400 million US gallons) of jet fuel (ATF) worth Rs 3,500 crore. This would be an annual requirements for Nacil (including flights operated under all sign AI and IC), Air India Chambers Ltd (brand name Air India Express, a wholly owned subsidiary of Nacil), and Airline Allied Services Ltd (brand name Alliance Air, another wholly owned subsidiary of Nacil). The bidders have been asked tosubmittheirbidsonNovember l9. Nacil sources told FE "The jet fuel would be uplifted for operations by Nacil and its subsidiaries in India. Of the total fuel consumed, 50% of its requirements is uplifted abroad and the tender that is now been issued is only for Indian operations. The fuel bill of Nacil and its subsidiaries is estimated to be nearly Rs 7,000 crore in 2007-08. Through its joint procurement strategy Nacil is aiming at retching economies of scale in its overall operations." Fuel constitutes nearly one third of the operating expenses of the Nacil at any variations in its prices and it’s likely to significantly impact the profit ability of the airline. 'The airline expects keen competition from public and private sector companies which would significantly contribute to lowering the jet fuel cost as its is expected that the companies may offer nearly upto 10% discount to get the contract," sources said. The airline is in the process of heading its fuel uplifts. The erstwhile Air India had already hedged 10% of its international fuel uplifts when the fuel prices were around $60 a barrel. However, these hedging operations were not continued beyond a particular time when fuel prices started falling. However, the airline would now be forced to rethink its risk management strategies in the light of the stiff price in fuel cost per barrel which is worrying the aviation industry in general. Nacil sources mentioned that the airline is also taking up with various state governments for the reduction of sales tax on domestic fuel uplifts which ranges from nearly 4% to30%.