Kamal Ghorui
With Aviation Turbine Fuel (ATF) prices surging, Air India is set to reduce its operations by nearly 100 flights a day across both domestic and international networks.The carrier currently operates about 1,100 daily flights. The most significant reductions are expected on routes connecting India with Europe, North America, Australia and Singapore during June, according to an ET report.ATF or jet fuel, for international carriers became costlier on Friday, with prices rising by 5 per cent. This marks the second consecutive monthly increase as oil marketing companies continue to gradually pass on the impact of higher global energy prices.However, there has been no revision in ATF rates for domestic airlines.According to state-run oil companies, the price of jet fuel for international operators in Delhi, which handles the country’s busiest airport, has been raised by $76.55 per kilolitre, or 5.33 per cent, taking the rate to $1,511.86 per kilolitre.Jet fuel prices were deregulated more than 20 years ago, and since then, they have generally moved in line with international benchmark rates under an established pricing arrangement with airlines.This latest increase comes after a sharp hike implemented on April 1. At that time, ATF prices for domestic carriers were raised by 25 per cent to Rs 1,04,927.18 per kilolitre. Airlines fear that the hike in ATF prices could intensify the financial strain. Earlier this week, the Federation of Indian Airlines, which represents carriers such as IndiGo, Air India and SpiceJet, cautioned that services may have to be curtailed unless the government provides relief from escalating fuel expenses.Although the government partially reversed a sharp rise in domestic jet fuel prices earlier in April, no similar support has been extended for international operations.Fuel typically accounts for as much as 40% of an airline’s operating expenditure. As a result, even relatively small price increases can significantly erode margins and ultimately lead to higher airfares.A senior Air India executive told ET that the airline is currently unable to recover operating costs on a large number of flights, warning that prolonged cost pressures could necessitate deeper service cuts.Air India has been hit harder than IndiGo because of its larger international footprint. The closure of Pakistani airspace has forced flights bound for Europe and North America to take longer routes, driving up both fuel burn and crew-related expenses. Services to North America now require technical halts in cities such as Vienna or Stockholm, further increasing costs.The airline has already accumulated losses of more than ₹20,000 crore. Its owners, Tata Sons, along with strategic partner Singapore Airlines, are under growing pressure to control expenses and steer the carrier back toward financial stability.
