Major Indian carriers, including Air India, IndiGo and SpiceJet, have warned the government that the aviation sector is under extreme financial stress and may be “on the verge of stopping operations” without urgent intervention.
The concerns were raised in a letter to the civil aviation ministry by the Federation of Indian Airlines (FIA), which represents the three airlines.
According to the PTI, the airlines said the ongoing turmoil in West Asia has pushed up global oil prices, while airspace restrictions have increased operating costs, particularly on long-haul routes. Aviation Turbine Fuel (ATF), which accounts for nearly 40 per cent of airline operating costs, has become significantly more expensive.
The FIA has urged the government to introduce a uniform fuel pricing mechanism for both domestic and international operations, similar to the earlier “crack band” system.
The federation said the widening gap between crude oil and ATF prices is making airline operations financially unsustainable, with airlines facing mounting losses, the news agency reported.
Warning of flight disruptions
The airlines warned that any further ad hoc changes in pricing or sharp increases in ATF costs could lead to grounding of aircraft and cancellation of flights across networks.
They also sought temporary relief, including deferment of the 11 per cent excise duty on ATF, stating that rising fuel prices and currency depreciation are significantly increasing operational costs, as per the PTI.
Domestic vs international pressure
Last month, the government capped ATF price increases at Rs 15 per litre for domestic flights. However, international operations saw a hike of around Rs 73 per litre, further widening the cost imbalance.
The FIA said this disparity has made both domestic and international routes financially unviable, causing heavy losses for airlines.
High taxes in major cities add pressure
The federation also highlighted that cities such as Delhi impose one of the highest VAT rates on ATF at 25 per cent, while Tamil Nadu has the highest at 29 per cent. Other major hubs like Mumbai, Bengaluru, Hyderabad and Kolkata have VAT rates ranging between 16 per cent and 20 per cent, affecting over half of airline operations in India, reported the PTI.
Demand for immediate relief
The airlines have urged the government to introduce a transparent pricing framework and provide urgent financial support to stabilise the sector. They warned that without intervention, the industry could face severe disruption.
(with PTI inputs)