One of India’s leading airlines, Air India, has decided to reduce its international flights from May to July this year due to the rise in jet fuel prices and airspace restrictions.
Airspace restrictions imposed following the conflict in West Asia have forced the airline to take longer routes to many international destinations, resulting in increased fuel burn.
It is estimated that the Air India group has incurred more than that $Losses of Rs 22,000 crore in the financial year ending March 31, 2026
The airline will reduce its services to Europe, North America, Australia and Singapore in June, according to the Economic Times.
CEO letter to employees explaining reasons for reducing international operations
Campbell Wilson, the outgoing CEO and MD of Air India, in a letter to employees, said that many of the airline’s international flights have become unprofitable and continued operations will increase losses.
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“We reduced some flights in April and May… The huge rise in jet fuel prices, coupled with airspace closures and longer flight routes, has made many of our international flights unprofitable for business,” PTI news agency quoted Wilson as telling staff.
He also noted that the situation is still “very difficult,” forcing the airline to take additional steps. “The airspace situation and jet fuel prices remain a major challenge, leaving us with no choice but to reduce the schedules for June and July,” he added.
Wilson added that although local operations were also affected, the impact was relatively less. “The profitability of domestic flights has also been significantly affected, but to a lesser extent, thanks to the government restricting the rise in domestic fuel prices to 25%,” he said.
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Increased airfares and fuel surcharges are not helping
To offset rising costs, the airline took pricing measures, but even these measures did not help, the CEO said. “We have increased air ticket prices and imposed fuel surcharges, but these high prices are affecting customer demand. We can only raise prices so much before people decide to stay home,” he added.
The industry body reported its concerns to the government in April
News of Air India scaling down its international operations comes four days after the Indian Airlines Association wrote to the Ministry of Civil Aviation, highlighting how current aviation fuel prices are impacting the industry.
The authority stated that operating flights at current fuel prices is “completely unworkable,” noting that ATF pricing for international operations has increased by $73 per litre
“India’s aviation industry is under severe pressure and is on the verge of shutting down or halting operations. The dire state of the aviation sector has been exacerbated by the West Asian War and the exorbitant increase in aviation turbine fuel prices,” the letter said.
The FIA also noted that aviation turbine fuel typically represents 30-40% of an airline’s costs. However, due to price increases associated with the US-Iran conflict, ATF costs have now risen to 55-60% of total operating expenses.
(with PTI inputs)
