Airlines in India Reduce Domestic Flights Due to Soaring Fuel Prices and Weak Demand

Central News Agency, New Delhi, May 27. Aviation fuel prices have soared due to the conflict in the Middle East, and with India in the off-season for domestic travel, airlines are reducing domestic flights to minimize losses. Air India will reduce domestic flights by 15%, and IndiGo will reduce domestic flights by 5% to 7%. The conflict between the United States, Israel, and Iran that broke out in February has led to the blockade of the Strait of Hormuz, a key global transport route for 20% of oil and natural gas. The conflict remains deadlocked, and the Strait of Hormuz has not been fully reopened, meaning the global energy supply shortage has not been alleviated, and the impact on people's livelihoods and economies in various countries is surfacing. The New Indian Express pointed out today that more than 90% of domestic flights in India are operated by a few airlines such as Air India and IndiGo. These companies have decided to reduce the scale of domestic flights starting June 1st for a period of three months. Airlines made this decision because the conflict in the Middle East led to energy supply shortages, causing aviation fuel prices to soar. In addition, this time coincides with the end of the school term in India and the start of the off-season for air travel. In this wave of flight reductions, Air India plans to reduce domestic flights by 15%, and IndiGo plans to reduce flights by 5% to 7%. Since fuel accounts for 40% of airlines' operating costs, Air India recently announced the reduction of some international flights. A senior executive at Air India told The New Indian Express that the company operates 3,800 flights per week. The fuel cost for domestic routes, which was previously 80,000 rupees (about 26,000 NTD) per 1,000 liters, has now risen to 100,000 rupees (about 32,000 NTD) per 1,000 liters. 'With fuel prices so high, it is not cost-effective to continue operating certain flights.' Although the Delhi government just lowered the fuel VAT from 25% to 7% on the 17th, the fuel VAT collected by various state governments varies, and overall, fuel VAT remains a heavy burden for airlines. Sources told The New Indian Express that airlines will not stop flying completely, but will reduce the number of flights on specific routes, and there are many places where they plan to temporarily stop flying. In order to subsidize the aviation industry facing severe tests, the Indian government raised the cap on aviation fuel prices for domestic airlines on April 1st to 25% to alleviate the impact of the global energy supply shortage on the Indian aviation industry. It also has response measures such as lowering parking fees and providing emergency credit plans for airlines.