Global oil prices are beyond India’s control but a tangle of govt interventions that have left Indian aviation structurally fragile. These demand correction.
On Tuesday, Union Cabinet approved a ₹5,000cr Emergency Credit Line Guarantee Scheme for airlines. This is the clearest signal, so far, that Indian aviation is in trouble. Indian carriers were not, anyway, having an easy run since the IndiGo crisis last Dec. War in Iran has compounded that misery.
An industry pleading for tax cuts and govt support is hardly novel. But a recent letter from the Federation of Indian Airlines (FIA) to civil aviation ministry, carries both genuine desperation and a partially credible threat. Current pricing of Aviation Turbine Fuel (ATF), FIA warns, will result in insurmountable losses, and “grounding of aircraft, resulting in cancellations of flights”. The crack spread, which is the gap between crude prices and the final price of ATF, has widened to $132 per barrel, according to FIA. So, fuel now accounts for nearly 60% of airline operating costs, up from the historical 35-40%.
An industry pleading for tax cuts and govt support is hardly novel. But a recent letter from the Federation of Indian Airlines (FIA) to civil aviation ministry, carries both genuine desperation and a partially credible threat. Current pricing of Aviation Turbine Fuel (ATF), FIA warns, will result in insurmountable losses, and “grounding of aircraft, resulting in cancellations of flights”. The crack spread, which is the gap between crude prices and the final price of ATF, has widened to $132 per barrel, according to FIA. So, fuel now accounts for nearly 60% of airline operating costs, up from the historical 35-40%.