Indian airline companies could fold or cease operations unless the government provides support on aviation turbine fuel (ATF) pricing, an industry body has warned. The Federation of Indian Airlines (FIA), which represents major carriers including Air India, IndiGo and SpiceJet, has written to the Civil Aviation Secretary for relief measures to continue airlines' operations.
The group said that both domestic and international airline operations are becoming increasingly unviable and unsustainable due to the unprecedented surge in jet fuel prices. The industry body said Indian airlines are under extreme financial stress and are on the verge of either shutting down or suspending operations if immediate relief is not provided.
The two-month-old Iran war has disrupted crude oil supply, raising prices for petroleum products including ATF.
According to the association, the sharp increase in fuel costs has severely undermined airline networks and overall operational viability. Jet fuel is the top expense for carriers.
The letter said airlines remain fully aligned with a transparent pricing framework for ATF. Under the 'crack band' formulation proposed by airlines through the FIA, oil marketing companies (OMCs) would be able to recover the entire increase in crude oil costs, along with margins in the form of crack spreads. This mechanism, the FIA said, would ensure that production costs are covered while allowing OMCs to earn adequate margins.
The industry body underscored that airlines are currently facing a highly precarious and challenging situation. It pointed to the unprecedented rise in ATF prices and the unusually high crack and differential between crude oil and ATF, which it said is challenging airline operations in their entirety.
"In order to survive, sustain and continue operations, urgent intervention with immediate and meaningful financial support is required to tide over the current situation," the FIA said in the letter.
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