Indian airlines are warning of possible operational shutdowns unless fuel prices are reduced. The Federation of Indian Airlines, which represents carriers such as IndiGo, Air India, and SpiceJet, issued a warning in a letter to the Civil Aviation Ministry, citing extreme financial stress due to rising jet fuel costs.
The industry advocates for a return to pandemic-era cost caps on aviation turbine fuel and calls for tax reductions or deferments to mitigate the ongoing crisis. The government has not yet responded to recent inquiries regarding possible policy shifts.
Market and Political Factors
Speculation is increasing that Prime Minister Narendra Modi’s administration may increase fuel prices following upcoming state elections. While official statements have denied any plans to hike petrol prices, the government has refrained from commenting on aviation fuel hikes.
Earlier this April, India briefly rolled back a significant increase in jet fuel prices, which had reached record levels. Despite India’s domestic fuel production exceeding consumption, costs remain high compared to nearby countries like Thailand, Dubai, Malaysia, and Singapore, largely due to substantial local taxes.
Indian refiners continue to produce more jet fuel than the domestic market consumes, but prices are determined on an import parity basis, incorporating freight, insurance, and customs from the Persian Gulf, contributing to elevated costs for carriers operating within the country.
