New Delhi: Indian airlines are likely to take a call on capacity cuts after the next ATF revision, as a sharp increase in jet fuel prices could force them to rationalise operations, particularly on less profitable routes, according to a report Tuesday.
Domestic carriers are in a wait-and-watch mode as they assess the impact of rising Aviation Turbine Fuel (ATF) prices and prepare for possible changes following the next price revision due in May, NDTV Profit reported.
The report said industry sources indicated that airlines may reduce frequencies on low-yield routes, with short-haul sectors expected to face the most significant impact if fuel costs rise substantially. Routes with consistently low passenger occupancy may also see cuts.
Airlines are also evaluating multiple scenarios, including potential changes to the government-imposed cap on ATF price increases.
If the current 25 per cent cap on monthly price hikes is withdrawn, domestic flight cancellations could rise sharply, the report said.
At the same time, the government has taken steps to cushion the aviation sector from the impact of the West Asia crisis. These include a 25 per cent reduction in parking and landing charges at major airports, along with capping the increase in ATF prices at 25 per cent for April.
Despite these measures, airlines remain cautious and continue to closely monitor fuel price movements before making any network or capacity adjustments.
India’s heavy reliance on oil imports — which account for over 85 per cent of its fuel needs — has heightened vulnerability to geopolitical disruptions, including the recent West Asia crisis that has already led to supply concerns in parts of the country.
Meanwhile, the government has raised excise duties on petroleum products, including high-speed diesel, with immediate effect, according to a notification issued by the Ministry of Finance.
The government also increased duty on ATF to Rs 42 per litre from Rs 29.5 per litre earlier, while export duty on petrol remained unchanged at nil. Separately, oil marketing companies had raised ATF prices.
IANS
