Air India, IndiGo & SpiceJet Warn Of Operational Crisis Amid Rising Fuel Costs; Seek Govt Help

India’s leading airlines, Air India, IndiGo and SpiceJet have warned the government that the aviation sector is under extreme stress and could be pushed to the edge of stopping operations. They have asked the government for relief on Aviation Turbine Fuel (ATF) pricing and financial support. Read on to know more!

Air India, IndiGo & SpiceJet Warn The Government

As per a report by Moneycontrol, the issue came amid rising global oil prices, which were triggered by tensions in the Middle East and airspace restrictions that have led to operating costs, particularly for long-journey flights. ATF makes up nearly 40% of an airline’s operational expenses, resulting in financial strain. In a letter dated April 26 to the civil aviation ministry, the Federation of Indian Airlines (FIA), representing the three carriers Air India, IndiGo and Spicejet, flagged the unprecedented rise in jet fuel prices and the differential between crude oil and ATF. The federation also stated that in order to survive, sustain and continue operation, the airline has requested urgent intervention for immediate and meaningful financial support to tide over the current situation.

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The FIA has also urged the government to extend a uniform fuel pricing mechanism across domestic and international operations, similar to the earlier crack-band framework. Airlines have also asked for a temporary deferment of the 11% excise duty on ATF.

Are Airlines On The Verge Of Stopping Their Operation?

While the government capped the ATF price hike for domestic operations at ₹15 per litre last month, international operations saw a sharp increase of ₹73 per litre, leading to even worse losses. The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations, said the federation, calling for a transparent pricing framework under the earlier crack-band mechanism.

Additionally, it also highlighted high state taxes, noting that Delhi levies a 25% VAT on jet fuel, which is among the highest in the country, while Tamil Nadu tops the list at 29%. Other major aviation hubs such as Mumbai, Bengaluru, Hyderabad and Kolkata have VAT rates ranging between 16 and 20%, collectively responsible for over half of India’s airline operations.

What do you think? Will the government take any necessary action soon?

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