• Source:JND

Air India is set to cancel about a hundred flights daily because of increased aviation fuel prices, which have resulted in many routes not being cost-effective anymore. Domestic and international flights alike will be affected by this decision. It marks one of the largest reductions in airline capacity in several years.

Air India operates around 1,100 flights per day. Therefore, if the proposed cuts are implemented, they will reduce their overall capacity by about 10 per cent, or approximately 100 flights per day.

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Airline officials said that this was done to secure stability within their operation from rising fuel costs, while also trying to maintain profitability at the route level.

The largest impact is expected to occur in long-haul international flights operated between other parts of the world and India, especially routes between Europe, North America, Australia, and Southeast Asia.

The frequency of flights between Delhi and Mumbai to London, Paris, New York City, Toronto, San Francisco, Sydney, Melbourne, and Singapore is expected to be reduced due to high fuel usage and smaller profit margins.

The airline is faced with these operational cutbacks due to significant increases in global jet fuel prices, with some estimates showing that fuel prices have increased by almost 80 per cent within the last few weeks.

Fuel prices comprise roughly 40 per cent of an airline's operating expense, meaning volatility has an adverse effect on airline profitability.

Industry-wide financial challenges

The aviation industry has been under severe financial pressure caused by rising fuel prices. In addition, airline associations are warning of serious financial stress and the potential for service cuts should prices remain high.

Air India is also dealing with additional pressures on longer international routes and escalating operating costs, creating additional financial pressure.

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According to sources in the industry, this change reflects a move away from aggressive growth and toward optimising routes and controlling costs; airlines will focus more on profitable sectors while cutting back on less profitable sectors.

The price of Aviation Turbine Fuel (ATF), or jet fuel, for international airlines was increased by 5 per cent on Friday, marking the second straight monthly rise after the surge in oil prices in the global market due to the closure of the Strait of Hormuz and heightening tension between the US and Iran. 


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