'On Verge Of Stopping Ops': Airlines' Mayday Call To Centre Amid High Fuel Prices As Iran Crisis Drags On
"Any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in insurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights," the Federation of Indian Airlines (FIA) said.
- Republic Business
- 3 min read
New Delhi: As the Iran crisis continues to drag on for weeks with no signs of a peace deal in sight, the aviation industry in India has expressed to the central government that it is on the verge of “stopping operations”, all thanks to high fuel prices, which has hit the sector.
At least three airlines including Air India have pleaded the government to revise the price of aviation turbine fuel (ATF). ATF prices makes up for 40 per cent of any airline's operating cost.
"Any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in insurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights," the Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, wrote in a letter to the Ministry of Civil Aviation.
"In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide over the current situation," it added.
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Challenges For The Aviation Sector
The federation mentioned that flights that operate on long-haul routes have face maximum difficulties. Hence the FIA has requested the ministry to stick to an uniform fuel pricing method for both domestic and international operations.
The government has now limited the hike in ATF price to Rs 15 per litre for the domestic sector. However, for international operations, ATF prices shot up by Rs 73 per litre.
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Excise Duty on ATF
The FIA has also asked the Ministry to temporarily defer levying excise duty on ATF, which is currently fixed at 11 per cent.
"With the abnormal increase in ATF prices from the pre-crisis period, adding rupee depreciation to the increased prices, the 11 per cent excise duty also increases manifold for the airlines and adds to the ATF price as a big impact on airlines," the letter mentioned.
Hormuz Blockade
Domestic airlines are reeling under high fuel prices, owing to the prolonged US-Iran war that has led to Iran blocking the Strait of Hormuz, the crucial energy chokepoint through which one-fifth of the world's energy supply passes.
The situation has been further complicated as the US has imposed a naval blockade on Iran. While Iran has maintained that it seeks to control Hormuz, US president Donal Trump, in his latest post on Truth Social has indicated that Iran is in a state of collapse and is seeking to reopen the Strait of Hormuz “as soon as possible.”