Industry body seeks urgent government intervention as rising ATF prices threaten flight operations
India’s aviation sector has raised alarm over soaring fuel costs, warning that airlines may be forced to scale down or even halt operations if the situation persists.
At least three major carriers, including Air India, have urged the government to review aviation turbine fuel (ATF) pricing, which accounts for nearly 40% of an airline’s operating costs.
In a letter to the Civil Aviation Ministry dated April 26, the Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, warned that continued price hikes could severely impact operations.
“… 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 FIA said.
The body added, “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.”
Long-haul routes hit hardest
Airlines said long-haul international routes are the most affected due to steep increases in fuel prices. They have requested the government to adopt a uniform pricing mechanism for ATF across domestic and international operations.
The industry has proposed reintroducing the “crack band” system, which limits extreme variations between crude oil prices and refined ATF costs.
Currently, while domestic ATF prices have been capped with a hike of Rs 15 per litre, international operations have seen a sharp increase of Rs 73 per litre.
Tax relief sought
Airlines have also sought a temporary reduction or deferment of the 11% excise duty on ATF, citing mounting financial pressure.
The FIA noted that rising fuel prices, combined with rupee depreciation, have significantly increased operational costs.
Global tensions driving fuel spike
The surge in fuel prices is linked to escalating tensions in the Middle East, particularly the conflict involving the United States and Iran, and disruptions in the Strait of Hormuz.
The strait, a key global energy corridor, handles a significant share of the world’s oil shipments. Any disruption to this route has a direct impact on global oil supply and prices, affecting fuel-dependent sectors like aviation.
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