Tension in the Middle East and rising crude oil prices have also put the aviation sector in big trouble. Due to the rise in crude oil prices, there are signs of increase in the prices of jet fuel for domestic and international flights. Also the way the route has changed. Because of that, there has also been an increase in airline operational costs. In view of this, Civil Aviation Minister Ram Mohan Naidu met airline executives on Friday. The executive warned that a prolonged war in West Asia would have a detrimental effect on operations. Airlines are seeking help from the government against any increase in the price of jet fuel, which usually accounts for 15-25 percent of the operating cost. Jet fuel prices in Singapore rose 72 per cent to a record $225.44 per barrel on Wednesday due to concerns about future supply.
Airlines made this demand
Citi analysts said in a note that if the fight continues they expect benchmark Brent crude to trade between $80 and $90 a barrel this week. People familiar with the development said that during his meeting with the minister, the airline executive also stressed on rationalizing airport fees and route navigation charges, which are levied by the Airports Authority of India (AAI). A senior government official said that for now, the Center has not considered any financial incentives for the aviation industry, although it is exploring solutions to any regulatory hurdles faced by Indian airline companies operating in West Asia. The official said that financial incentive is a decision that has to be taken by different parts of the government.
increasing costing
The official cited increased watch hours at western airports and exemptions from pilot duty hours rules on some routes, which have since increased due to the need to bypass conflict areas. Air India’s costs have already increased because the airline has to take longer routes to serve Europe and North America, due to which fuel costs are increasing. IndiGo, which had leased six wide-body aircraft to start flights to Europe, is not able to use them as the planes’ owner Norse Atlantic is bound by European aviation regulator EASA rules, which prevent it from flying in West Asia airspace.
Premium increased for insurance coverage
The special thing is that West Asia is the only remaining transit hub for Indian airline companies flying between Europe and Asia, because after last year’s Operation Sindoor, they are not allowed to use Pakistan airspace. Also, insurance companies have started increasing the premiums for war risk insurance coverage. On routes like Delhi-Dubai-Delhi, there has been an increase of Rs 30-40 lakh for narrow-body flights and Rs 90 lakh-1 crore for wide-body flights. Meanwhile, Air India is pressurizing the Center to allow it to use a route over China to bypass Pakistan airspace. However, for such a step, the government will have to take approval from the Home and Defense Ministries before holding formal talks with China.
278 international flights canceled
Airlines have started very limited operations to West Asia, especially to evacuate thousands of Indian citizens stranded in this region. The government said domestic airlines canceled 278 international flights for the day on Friday and scheduled 96 flights to and from West Asia. An airline official said that although airports are allowing limited flights, it largely depends on safety risk assessment before each flight, which delays the turnaround time.
Therefore, the use of planes is also decreasing, due to which flights are not becoming possible. We will have to see how long the operations in West Asia can continue if the situation remains like this. S&P analysts wrote that the impact of this dispute will be greater on airline companies headquartered in India, because they have more capacity and routes to West Asia. We believe that airline companies which have more international routes will be affected the most.