• Source:JND

Major Indian airlines, including Air India, IndiGo and SpiceJet, have sought a revision in Aviation Turbine Fuel (ATF) pricing and a financial support from the government, claiming that the country's airline industry is under extreme stress and on the verge of "stopping operations".

ATF accounts for 40 per cent of a carrier's operational expenses, and hence the West Asia conflict has pushed them towards an uncertain situation. The ongoing tension in West Asia has pushed oil prices up and increased airspace restrictions, especially on long-haul routes.

The geopolitical turmoil has increased the operational costs of carriers, prompting them to seek state relief.

The Federation of Indian Airlines (FIA) has written to the Ministry of Civil Aviation and urged to take immediate steps to extend the same fuel pricing mechanism uniformly across both domestic and international operations, as was done in the past with the establishment of the crack band.

What did FIA say?

The FIA has said that an unprecedented rise in jet fuel prices and exorbitant differential between crude and ATF have led to an overall challenge to the operation of airlines.

ALSO READ: Borrowed Blanket, Shoelace And Mom's Superpush: How Did Paramedics Deliver Baby Using Minimal Resources Mid-Air?

FIA, which represents Air India, IndiGo and SpiceJet, said, "Any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in insurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights."

"In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide us over the current situation," it said in a letter on April 26.

The airlines have also sought a temporary deferment of excise duty on ATF. At present, excise duty is at 11 per cent.

"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.

Government's intervention so far

In March, the Central government limited the ATF price hike to Rs 15 per litre for domestic operations. However, for international operations, the price rose by Rs 73 per litre.

The FIA has argued that the current situation is creating a severe imbalance in domestic and international operations, and the government must intervene in the current ATF ad hoc pricing

"The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations."

ALSO READ: Swiss Air Flight Aborts Takeoff At Delhi Airport After Engine Fire Incident; 6 Passengers Injured, Hospitalised

The federation has pitched for a transparent pricing framework under the crack band mechanism implemented in October 2022.

The airlines have said that Delhi, the country's largest aviation hub, has the second-highest value-added tax (VAT) on jet fuel, at 25 per cent, after 29 per cent is levied in Tamil Nadu.

"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.


Also In News