Major Indian airlines, including Air India, IndiGo, and SpiceJet, have appealed to state-owned oil marketing companies to postpone the planned increase in aviation turbine fuel (ATF) prices. The carriers argue that the proposed hikes would exacerbate their financial challenges and hinder the recovery of the aviation sector.
Industry Plea for Relief
In a joint representation to oil majors such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, the airlines highlighted that ATF accounts for up to 40% of their operating costs. They noted that the recent surge in crude oil prices has already pushed up fuel costs, and any further increase would severely impact their profitability.
The airlines emphasized that the aviation industry is still grappling with the aftermath of the COVID-19 pandemic, with many carriers operating at a loss. They urged oil companies to consider the fragile state of the sector and defer the price revision to a later date.
Impact on Operations
According to industry experts, a hike in ATF prices could lead to higher airfares, potentially dampening demand. The airlines warned that without cost relief, they might be forced to cut capacity or reduce services on certain routes. This would not only affect passengers but also impact tourism and business travel, which are crucial for economic growth.
The plea comes amid reports that oil marketing companies are planning to increase ATF prices by 5-7% in the coming weeks, following global crude oil trends. The airlines have requested a meeting with the Ministry of Petroleum and Natural Gas to discuss the matter further.
Government's Role
The carriers are also seeking government intervention to moderate fuel taxes, which account for a significant portion of ATF prices. They have called for a reduction in central excise duty and state VAT on jet fuel to provide immediate relief. The airlines argued that lower fuel costs would enable them to offer more competitive fares and stimulate demand.
While the oil companies have not yet responded officially, industry observers believe that the government may consider the airlines' request, given the sector's strategic importance. The aviation industry supports millions of jobs and contributes substantially to the economy.
In the meantime, airlines are exploring ways to improve fuel efficiency through fleet modernization and operational measures. However, they maintain that short-term price stability is essential for their survival and recovery.
