A group representing carriers seeks a return to Covid-era cost caps on aviation fuel and a reduction in taxes to survive the crisis
India’s major airlines warned of a potential suspension in services unless the government lowered jet fuel prices.
“The airline industry in India is under extreme stress and on the verge of closing down or of stopping its operations,” the Federation of Indian Airlines, representing carriers including IndiGo, Air India and SpiceJet, said in a letter to India’s Civil Aviation Ministry, seen by Bloomberg.
They sought a return to pandemic-era cost caps on aviation turbine fuel and a reduction or deferment in taxes. The federation and the ministry did not immediately respond to queries sent after usual business hours.
Speculation is mounting that Prime Minister Narendra Modi’s administration will raise fuel prices once voting in state elections ends on Wednesday. While the government at a briefing on Tuesday denied any plan to raise petrol prices, it declined to answer a similar question on aviation turbine fuel.
India in early April had rolled back a steep increase in jet fuel prices for local flights within hours of pushing them to a record. Even so, carriers pay substantially more for fuel in the country than in Thailand, Dubai, Malaysia or Singapore because of high local taxes.
Although Indian refiners produce more jet fuel than the country consumes, prices are still set on import-parity basis – as if fuel had been shipped in from the Persian Gulf, complete with notional freight charges, insurance and customs levies.