Jet fuel price for international airlines hiked 5.3%, fares under pressure

Hindustan Times reports on the escalating cost pressures facing airlines in India, with a significant 5.33% hike in jet fuel prices for international carriers. This marks the second increase since April 1, adding to the financial strain on the aviation sector, even as domestic fares grapple with the combined impact of rising fuel expenses and operational disruptions.

The Federation of Indian Airlines, representing major carriers like Air India, IndiGo, and SpiceJet, has issued a stark warning to the civil aviation ministry, indicating that airlines are on the brink of ceasing operations. They have urgently called for intervention regarding what they describe as ad hoc Aviation Turbine Fuel (ATF) pricing, which is rendering airline networks unviable and unsustainable.

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stopping operations

Air India has confirmed increasing airfares and implementing fuel surcharges as a partial measure to offset the surge in fuel costs. However, these higher fares are reportedly affecting customer demand, a sentiment echoed by data showing a dip in passenger load factors in March compared to February.

Industry insiders suggest Indian airlines are entering a challenging phase. The squeeze on profitability from higher international airfares, persistent fuel cost increases, and weakening overseas demand is expected to continue for at least the next two quarters. Capacity on international routes is estimated to be down by 20-25%, with India-UAE routes particularly affected. While domestic demand might offer some support until mid-June, the subsequent lean season coupled with sustained high fuel prices could force further capacity reductions and margin erosion.

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ad hoc ATF pricing that was rendering airline networks “unviable and unsustainable.”