New Delhi: Two of India’s biggest airlines are preparing to significantly reduce their domestic flights as very high jet fuel costs and weaker demand after
the holiday season are affecting operations. Air India and IndiGo, which together control more than 90% of the Indian aviation market, will scale back domestic services for a 90-day period beginning June 1, The New Indian Express reported citing multiple sources.
Air India is planning to reduce up to 15% of its domestic operations, while IndiGo is looking at cuts of between 5% and 7%, according to the report.
ATF prices cross Rs 1 lakh per kilolitre
The trigger for the cutbacks is a dramatic rise in Aviation Turbine Fuel costs following the outbreak of the US-Iran war. “The ATF cost for our domestic flights used to be Rs 80,000 per kilolitre. It has now risen to more than Rs 1 lakh, depending on the city, as VAT imposed by state governments varies. It would not be financially viable to operate when ATF prices are this high,” a senior Air India source told The New Indian Express. The airline operates an average of 3,800 flights per week and said it would not withdraw any route entirely but would reduce frequencies on specific sectors. Routes likely to be affected include Mumbai to Ahmedabad, Nagpur, Patna and Bhopal, as well as Delhi flights to Hyderabad, Bengaluru and Kolkata.
IndiGo cites seasonal demand slump
IndiGo’s decision is driven largely by the seasonal dip in demand that typically follows the school holiday period. “Historically, the months following the academic vacation period witness lower occupancy levels. IndiGo operates 1,950 flights daily, so even a small percentage cut translates into a significant number of cancellations,” an airline source told the publication. The reduced international network is also expected to bring down the number of passengers taking domestic connecting flights to hubs like Delhi and Mumbai, adding to the demand pressure. Air India had separately announced a reduction in international operations between June and August, citing airspace restrictions and record jet fuel prices for international routes.
