Civil aviation minister meets airlines amid Gulf tensions; Warn of rising costs, operational risks
New Delhi: Civil aviation minister Ram Mohan Naidu Friday met with airline executives, with the latter raising the alarm that any prolonging of the conflict in West Asia would severely dent operations as Indian carriers are heavily exposed to the region.
Airlines are demanding government support against any spike in the price of jet fuel, which typically accounts for 15-25% of operating cost. Jet fuel prices at Singapore rocketed 72%, scaling a record $225.44 a barrel on Wednesday on worries about future supplies.
Analysts at Citi said in a note that they expect benchmark Brent crude to trade between $80 and $90 a barrel this week if the conflict continues. Airline executives also pressed for rationalisation in airport fees, and route navigation charges that are imposed by the Airports Authority of India (AAI) during their meeting with the minister, said people aware of the development.
A senior government official said for now, the Centre hasn’t considered any financial incentives for the aviation industry though it is evaluating ways to resolve any regulatory bottlenecks faced by Indian carriers operating to West Asia “Financial incentive is a call which has to be taken by various arms of the government,” said the official.
“In the meantime, we are looking at giving expeditious permission so that airlines can continue operating to West Asia.”
The official mentioned extending watch hours at western airports, and allowing exemption from pilot duty hour rules on certain routes that have since become extended due to the need to bypass the conflict-affected region.
Costs have already soared for Air India with the Tata-owned carrier forced to take longer routes for services to Europe and North America, inflating fuel expenses. IndiGo, which had leased six wide-body aircraft to launch flights to Europe, is unable to use them as Norse Atlantic, the owner of the planes, is bound by European aviation regulator EASA’s rules which prohibits it from flying over West Asia airspace.
Notably, West Asia is the sole remaining transit hub for Indian carriers flying between Europe and Asia as they aren’t allowed to use Pakistan airspace since last year’s Operation Sindoor.
Simultaneously, insurance companies have started raising premiums for hull war risk insurance coverage. There has been an increase of ₹30-40 lakh for a narrow-body flight and ₹90 lakh-₹1 crore for a wide-body flight on routes such as Delhi-Dubai-Delhi.
Meanwhile, Air India is pushing the Centre to allow using a route over China to circumvent the Pakistan airspace. However, such a move requires approval from the ministries of home and defence before the government can formally engage with China.
EVACUATION OPS
Airlines have started very limited operations to West Asia, mainly to evacuate thousands of Indian nationals stranded in the region.
Airline executives however lament that such flights are unviable due to the unreliability of operations at hub airports like Dubai, Doha, and Riyadh while the aircraft flies virtually empty on its leg to West Asia.
Domestic airlines cancelled 278 international flights for the day and scheduled 96 flights to and from West Asia on Friday, the government said. “While the airports are allowing limited flights, it depends on extensive safety risk assessment before each flight, which delays turnaround times,” said an airline executive.
“So, the utilisation of the plane is also decreasing, making the flight quite unviable. We have to see how long West Asia operations can be sustained if the situation persists.”
Shares of InterGlobe Aviation, the operator of IndiGo, fell for the fourth straight day on Friday in line with the broader benchmark Sensex, as analysts cautioned that the risk of the conflict can be disproportionate on Indian carriers. “The conflict will likely have a more pronounced effect on Indian-headquartered carriers, given their higher capacity and number of routes to West Asia,” wrote analysts at S&P.
“We believe carriers with a higher proportion of international routes will be most affected.”
Airlines are demanding government support against any spike in the price of jet fuel, which typically accounts for 15-25% of operating cost. Jet fuel prices at Singapore rocketed 72%, scaling a record $225.44 a barrel on Wednesday on worries about future supplies.
Analysts at Citi said in a note that they expect benchmark Brent crude to trade between $80 and $90 a barrel this week if the conflict continues. Airline executives also pressed for rationalisation in airport fees, and route navigation charges that are imposed by the Airports Authority of India (AAI) during their meeting with the minister, said people aware of the development.
A senior government official said for now, the Centre hasn’t considered any financial incentives for the aviation industry though it is evaluating ways to resolve any regulatory bottlenecks faced by Indian carriers operating to West Asia “Financial incentive is a call which has to be taken by various arms of the government,” said the official.
“In the meantime, we are looking at giving expeditious permission so that airlines can continue operating to West Asia.”
The official mentioned extending watch hours at western airports, and allowing exemption from pilot duty hour rules on certain routes that have since become extended due to the need to bypass the conflict-affected region.
Costs have already soared for Air India with the Tata-owned carrier forced to take longer routes for services to Europe and North America, inflating fuel expenses. IndiGo, which had leased six wide-body aircraft to launch flights to Europe, is unable to use them as Norse Atlantic, the owner of the planes, is bound by European aviation regulator EASA’s rules which prohibits it from flying over West Asia airspace.
Notably, West Asia is the sole remaining transit hub for Indian carriers flying between Europe and Asia as they aren’t allowed to use Pakistan airspace since last year’s Operation Sindoor.
Simultaneously, insurance companies have started raising premiums for hull war risk insurance coverage. There has been an increase of ₹30-40 lakh for a narrow-body flight and ₹90 lakh-₹1 crore for a wide-body flight on routes such as Delhi-Dubai-Delhi.
Meanwhile, Air India is pushing the Centre to allow using a route over China to circumvent the Pakistan airspace. However, such a move requires approval from the ministries of home and defence before the government can formally engage with China.
EVACUATION OPS
Airlines have started very limited operations to West Asia, mainly to evacuate thousands of Indian nationals stranded in the region.
Airline executives however lament that such flights are unviable due to the unreliability of operations at hub airports like Dubai, Doha, and Riyadh while the aircraft flies virtually empty on its leg to West Asia.
Domestic airlines cancelled 278 international flights for the day and scheduled 96 flights to and from West Asia on Friday, the government said. “While the airports are allowing limited flights, it depends on extensive safety risk assessment before each flight, which delays turnaround times,” said an airline executive.
“So, the utilisation of the plane is also decreasing, making the flight quite unviable. We have to see how long West Asia operations can be sustained if the situation persists.”
Shares of InterGlobe Aviation, the operator of IndiGo, fell for the fourth straight day on Friday in line with the broader benchmark Sensex, as analysts cautioned that the risk of the conflict can be disproportionate on Indian carriers. “The conflict will likely have a more pronounced effect on Indian-headquartered carriers, given their higher capacity and number of routes to West Asia,” wrote analysts at S&P.
“We believe carriers with a higher proportion of international routes will be most affected.”
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