Our Bureau

Mumbai , Sept. 15

THE sustained rise in fuel prices drove Air India's fuel bill up by Rs 650 crore in 2004-05. However, the fuel surcharge imposed last year helped recover about 40 per cent of this additional cost.

According to an airline spokesperson, AI is in talks with members of the Board of Aviation Representatives on increasing the fuel surcharge further. The surcharge currently stands at $40-$80 on the UK and US sectors, and $15 on the Gulf sector.

This year, AI has budgeted for a fuel bill of Rs 2,000 crore. Though the figure was around the same as that of last year, the spokesperson said the two could not be compared as Air India Express operations were being accounted separately this year.

To shield itself from fuel price hikes in future, AI also plans to hedge 10-15 per cent of its international fuel uplift from the last quarter of the current fiscal. The airline uplifts around 60 per cent of its fuel requirements from abroad.

Three merchant bankers — JM Morgan Stanley, DSP Merrill Lynch and HSBC — have been short-listed to advise the airline on its IPO, the spokesperson added.

On Air India Express, he said the low-cost carrier would commence operations on the Chennai-Kuala Lumpur-Singapore sector in the first half of 2006, after it took delivery of four leased Boeing 737-800 aircraft.

The spokesperson was talking to journalists on the sidelines of a press briefing called to announce AI's environment protection initiative. The airline has aligned with the United Nations Environment Programme, a global body that works with governments on the protection of the environment.

According to Mr S.K. Joshi, Joint Secretary, Ministry of Environment and Forests, the aviation sector has a local and a global environmental impact. AI has initiated preventive actions to save the environment by adhering to the schedule stipulated in the Montreal Protocol to phase out ozone depleting substances.

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