Indian Airlines Warn of Flight Cancellations Amid Rising Fuel Prices
Indian airlines warn Centre of flight cancellations over fuel crisis amid West Asia conflict
Hindustan TimesImage: Hindustan Times
The Federation of Indian Airlines (FIA), representing major carriers like Air India and IndiGo, has alerted the Indian government about potential flight cancellations due to soaring aviation turbine fuel (ATF) prices. The FIA requests urgent intervention ahead of a scheduled ATF price revision on May 1, citing unsustainable operational costs exacerbated by the ongoing conflict in West Asia.
- 01The aviation industry faces operational challenges due to a 295% increase in ATF prices amid the West Asia conflict.
- 02The FIA has requested a return to a transparent pricing framework and tax reductions to alleviate financial pressure.
- 03ATF now constitutes 55-60% of airline operating costs, significantly impacting profitability.
- 04Airlines have already experienced substantial losses, particularly in international operations.
- 05The conflict has led to a widening crack differential between Brent crude oil and ATF prices.
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The Federation of Indian Airlines (FIA), which includes major carriers such as Air India, IndiGo, and SpiceJet, has issued a warning to the Indian government regarding potential flight cancellations due to escalating aviation turbine fuel (ATF) prices. In a letter dated April 26, the FIA stated that the airline industry is on the brink of ceasing operations unless urgent government intervention is made before the next ATF price revision on May 1. The FIA highlighted that the current pricing structure, which treats domestic and international ATF rates differently, creates a severe imbalance, rendering airline operations unsustainable.
On April 1, ATF prices for domestic airlines were raised by 114.55%, reaching ₹2,07,341 per kilolitre in Delhi, although government intervention later moderated this to ₹1,04,927 per kilolitre. The conflict in West Asia has driven Brent crude prices from $72 to $118 per barrel, leading to a staggering 295% increase in ATF prices. This rise has pushed fuel costs to constitute 55-60% of operational expenses, severely impacting profitability. The FIA has made three requests to the government: reinstating a transparent pricing mechanism, deferring excise duty on ATF, and reducing value-added tax in key states like Delhi and Tamil Nadu. Industry experts, however, view the FIA's letter as a pressure tactic rather than a genuine plea for help.
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The surge in ATF prices could lead to flight cancellations, affecting travelers and the broader economy reliant on air transport.
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