Air India to cut international flights amid Rs 22,000 crore losses, rising jet fuel costs

Reeling under whooping Rs 22,000 crore losses incurred in the last financial year and rising jet fuel prices, Air India has decided to cut down on international flights from May to July. The airlines said that the decision is based on rising jet fuel prices and airspace closures due to the ongoing West Asia conflict, which has pushed up fuel consumption and made many of its international routes “unprofitable” to operate.

International routes hit

The airline has decided to cut down the number of flights to Europe, North America, Australia, and Singapore in June, reported the Economic Times.

The decision came to the fore in a message by Air India’s outgoing CEO and Managing Director Campbell Wilson to its employees, stating that continuing operation on those routes would lead to incurring further losses.

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https://thefederal.com/category/business/indian-airlines-warn-of-shutdown-risk-as-fuel-prices-surge-amid-west-asia-conflict-241006

“We have reduced some flying for April and May... A massive rise in jet fuel prices, together with airspace closures and longer flying routes, has caused many of our international flights to become unprofitable to operate,” stated Wilson.

Domestic operations also impacted

As for the impact on domestic airlines, Wilson wrote that the impact, although not non-existent, has been relatively less, due to the Centre’s capping of the domestic jet fuel price rise to 25 per cent.

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"The profitability of domestic flights has also been significantly affected, but to a lower degree, thanks to the government's limitation of the domestic fuel price rise to 25%," he added.

Wilson indicated that despite the airline’s effort to address the issue through airfare hikes and imposing fuel surcharges, the results have not met expectations.

Fare hikes fall short

"We have increased airfares and imposed fuel surcharges but... these higher airfares impact customer demand, so we can only raise fares so far before people decide to stay home," he added.

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Expressing concern over the ongoing West Asia conflict, Wilson said that the airlines hopes that "the Middle East situation settles - and the Strait of Hormuz opens - soon so that we can get back to a more normal state."

Industry flags wider crisis

The development comes days after the Federation of Indian Airlines wrote to the Ministry of Civil Aviation drawing its attention to the current stress on the civil aviation industry due to rising fuel prices.

“The airline industry in India is under extreme stress and is on the verge of shutting down or stopping operations. The dire condition of the aviation sector has been exacerbated by the West Asia war and the exorbitant increase in aviation turbine fuel prices,” stated the letter.