Indian airlines warn aviation operations near shutdown without fuel tax relief

The Federation of Indian Airlines, representing Air India, IndiGo and SpiceJet, warned the government that the aviation industry is on the verge of “stopping operations” due to rising costs linked to tensions in the Middle East and disruptions near the Strait of Hormuz, Press Trust of India reported Tuesday.

The airlines sought a temporary deferment of the 11 percent excise duty on Aviation Turbine Fuel (ATF), as well as a uniform fuel pricing mechanism for domestic and international operations.

ATF accounts for about 40 percent of airlines’ operating costs. Last month, the government capped the ATF price increase at 15 Indian rupees ($0.16) per liter for domestic flights, while international prices rose by 73 Indian rupees ($0.77) per liter.

“… any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in unsurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights,” the federation said in a letter dated April 26 to the Civil Aviation Ministry.

“In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide over the current situation,” it said.

The airlines said the situation has practically made both international and domestic operations completely unviable and resulted in significant losses for the aviation sector in April.

The Strait of Hormuz is one of the world’s most critical energy chokepoints, with roughly one-fifth of global oil supply passing through it daily.

The waterway has faced disruptions since early March following the outbreak of war on Feb. 28, when the United States and Israel launched a joint offensive on Iran. The war is currently on hold under a ceasefire, while diplomatic efforts are ongoing to reach a lasting agreement.