Major Indian airlines have told the Union government that the country's airline industry is on the verge of shutting down due to the rising aviation fuel costs, and have sought ATF price revision as well as financial support.
The airlines, which sent a letter to the civil aviation ministry via the Federation of Indian Airlines (FIA), sought steps to extend the same fuel pricing mechanism for both domestic and international operations.
The West Asia crisis, which has disrupted energy supplies across the world, has driven up oil prices. Restrictions on airspace have also shot up the operating costs of airlines. Notably, among an airline's operational expenses, Aviation Turbine Fuel (ATF) accounts for around 40% of the total, taking the lion's share.
"... any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in unsurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights," the federation, which represents Air India, IndiGo and SpiceJet, said.
"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 in the letter dated 26 April.
The airlines have also asked the government to defer the excise duty on ATF, currently set at 11%.
"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," they said.
In March, the central government limited the ATF price hike to ₹15 per litre for domestic operations while the hike for international operations was considerably steeper, at ₹73 per litre.
The letter revealed that for airlines, continuing international and domestic operations has become unviable and has already resulted in significant losses in April.
"The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations," the letter stressed.
The federation has called for a pricing framework based on the crack band mechanism (USD 12–22/BBL), which was implemented in October 2022, claiming that this leaves room for a reasonable and fair margin for Oil Marketing Companies (OMCs).
The FIA has stated that Delhi, which is India's largest aviation hub, has the second highest VAT (value-added tax) on jet fuel (25%), while the highest in the country is levied by Tamil Nadu (29%).
"The other major aviation cities, viz. Mumbai, Bangalore, Hyderabad, and Kolkata range between 16 per cent and 20 per cent. These 6 cities cover more than 50 per cent of airlines' operations within India," the federation said.
