airlines crisis
The country's major airlines Air India, Indigo and SpiceJet have warned the government that in the current situation the airline industry is under extreme pressure and may be on the verge of closing operations. Companies have demanded relief and financial help in the prices of Aviation Turbine Fuel (ATF).
Due to increasing tension and war in West Asia, there has been a sharp rise in the prices of crude oil. Along with this, due to restrictions in the airspace of many countries, flight routes have become longer, due to which the expenses of the airlines have increased further. This has especially affected long-haul international flights. ATF accounts for about 40% of the total operating expenses of airlines, so as its price increases, the costs of companies increase rapidly.
Airlines' organization Indian Airlines Federation (FIA) has written a letter to the Civil Aviation Ministry and put forward several important demands. This includes the demand for implementing a uniform fuel pricing system for domestic and international flights, as was done earlier in the crack band mechanism. Apart from this, the airlines have also appealed for temporary removal of 11% excise duty on ATF, to help overcome the current crisis.
Recently, the government had limited the increase in the price of ATF to Rs 15 per liter for domestic flights, but for international flights the increase reached Rs 73 per liter. Airlines say that this has made international operations almost a loss-making deal. According to FIA, if such difference in ATF prices continues, the companies will suffer huge losses and many aircraft may have to be grounded, which will also increase flight cancellations.
Airlines have also termed the heavy tax on jet fuel as a problem. According to FIA, 25% VAT is levied on ATF in Delhi, while in Tamil Nadu it is up to 29%. In big cities like Mumbai, Bengaluru, Hyderabad and Kolkata, it ranges between 16% to 20%. These six big cities handle more than half of the total airline operations in the country, so the tax impacts the entire sector.
Airlines have demanded immediate intervention from the government, so that fuel pricing can be balanced and the industry can get relief. Companies say that if immediate steps are not taken, the airline network may become unstable and services will be affected. Expensive ATF, rising taxes and global tensions have brought the Indian aviation sector into difficult times. Now all eyes are on the government's decisions, which will decide whether the industry gets relief or the crisis deepens.
