Indian airlines seek fare cap removal as Iran crisis hits operations
- Indian airlines are incurring 'huge' revenue losses and face higher operational costs in part because of a jump in jet fuel prices
NEW DELHI: An airlines group representing IndiGo, Air India and SpiceJet has warned the Indian government of route withdrawals and delayed fleet and network expansions if fare caps imposed in December are not revoked, a letter shows.
The letter highlights growing financial pain in the world’s fastest-growing market where, even before the Iran crisis, airlines were hit hard by a Pakistani airspace ban for international operations due to diplomatic tensions.
In December, widespread aviation disruptions due to mass flight cancellations by IndiGo over operational issues promptedauthorities to cap airfares depending on the distance, with the maximum being 18,000 rupees ($192.04) for a one-way journey.
The crisis has since eased, but caps remain in place without any timeline. Indian airlines are incurring “huge” revenue losses and face higher operational costs in part because of a jump in jet fuel prices due to the Iran war, the Federation of Indian Airlines said in a private letter to the government on March 12, seen by Reuters.
Pakistan extends airspace ban on Indian-registered aircraft till April 24
Current situation may threaten viability
“If the current situation continues, airlines will face severe financial losses, pushing several operators closer to unsustainable financial conditions and potentially threatening their continued viability,” the March 12 letter, which was not made public, said.
The civil aviation ministry and the FIA did not respond to requests for comment. IndiGo and Air India, which control more than 90% of India’s domestic market, did not respond. A spokesperson for SpiceJet also did not respond to a request for comment.
A $1 per barrel change in fuel prices could impact IndiGo’s full-year fuel bill by about 3 billion rupees, HSBC analysts have said. Jet fuel prices have risen sharply in recent days due to the Middle East war.
Iran war deals double blow to Indian airlines already hit by Pakistan airspace ban
IndiGo and Air India are also flying longer routes to reach Europe and North America owing to airspace restrictions.
In a separate letter sent on Thursday, the FIA also urged the government to withdraw a directive mandating that a minimum 60% of seats on any flight be made available without additional charges for seat selection, saying it could lead to higher fares.
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