Indian airlines lobby premier on soaring cost of jet fuel
Amy Yee | Friday, 20 June 2008
FT Syndicatin Service
NEW DELHI: Leading Indian airline executives met India's prime minister late last week to discuss how to mitigate soaring fuel prices, which could cost the industry as much as $2.0bn this year.
"This is a crisis situation that we have to tackle with all means," said Wolfgang Prock-Schauer, chief executive of Jet Airways, India's leading private airline.
"If we don't act now it could be a $2.0bn loss for the Indian industry in total."
Mr Prock-Schauer told the Financial Times that India's airlines have absorbed an additional $100m in jet fuel costs each month since March, which translates into an extra $1.2bn this year. But if global fuel prices continue to climb, airlines fear, the annual bill could hit $2.0bn.
Jet, Air India, Kingfisher, Indigo and other airlines met Praful Patel, India's civil aviation minister, and Manmohan Singh, the prime minister, late last week.
"The airlines are coming together to ask for a better operating environment," said Mr Prock-Schauer.
Airlines across Asia are struggling to cope with climbing oil prices and are consolidating routes, using smaller aircraft and lowering capacity.
Talks in New Delhi covered reduction of jet fuel taxes and airport fees. Airlines in India pay taxes on jet fuel that are up to 70 per cent higher than in other benchmark countries.
Meanwhile, India's airports are increasing rental rates, and tacking on extra "development" fees to help funding of new construction and expansion. Landing charges at airports in India are 50 per cent higher than in other countries, said Mr Prock-Schauer.
Rocketing fuel costs deal a sharp blow to the booming growth of India's fledgling airlines. Since the industry opened up to private competition at least half a dozen airlines, including low-cost carriers, have taken to the skies.
India's passenger traffic grew 18 per cent to 86.8m in the year ended March 2007, according to the country's civil aviation ministry.
India's airline industry would demand $72bn worth of new commercial aircraft over the next 20 years, or almost 900 aircraft, according to projections from the US aircraft maker Boeing.
Fuel costs are surging after Indian Oil Corp, the nation's largest oil refiner, boosted prices. Jet fuel now costs 71,759 rupees ($1,673) a kilolitre in Mumbai, compared with 47,045 rupees in January. The latest price is equal to about $6.32 a gallon.
NEW DELHI: Leading Indian airline executives met India's prime minister late last week to discuss how to mitigate soaring fuel prices, which could cost the industry as much as $2.0bn this year.
"This is a crisis situation that we have to tackle with all means," said Wolfgang Prock-Schauer, chief executive of Jet Airways, India's leading private airline.
"If we don't act now it could be a $2.0bn loss for the Indian industry in total."
Mr Prock-Schauer told the Financial Times that India's airlines have absorbed an additional $100m in jet fuel costs each month since March, which translates into an extra $1.2bn this year. But if global fuel prices continue to climb, airlines fear, the annual bill could hit $2.0bn.
Jet, Air India, Kingfisher, Indigo and other airlines met Praful Patel, India's civil aviation minister, and Manmohan Singh, the prime minister, late last week.
"The airlines are coming together to ask for a better operating environment," said Mr Prock-Schauer.
Airlines across Asia are struggling to cope with climbing oil prices and are consolidating routes, using smaller aircraft and lowering capacity.
Talks in New Delhi covered reduction of jet fuel taxes and airport fees. Airlines in India pay taxes on jet fuel that are up to 70 per cent higher than in other benchmark countries.
Meanwhile, India's airports are increasing rental rates, and tacking on extra "development" fees to help funding of new construction and expansion. Landing charges at airports in India are 50 per cent higher than in other countries, said Mr Prock-Schauer.
Rocketing fuel costs deal a sharp blow to the booming growth of India's fledgling airlines. Since the industry opened up to private competition at least half a dozen airlines, including low-cost carriers, have taken to the skies.
India's passenger traffic grew 18 per cent to 86.8m in the year ended March 2007, according to the country's civil aviation ministry.
India's airline industry would demand $72bn worth of new commercial aircraft over the next 20 years, or almost 900 aircraft, according to projections from the US aircraft maker Boeing.
Fuel costs are surging after Indian Oil Corp, the nation's largest oil refiner, boosted prices. Jet fuel now costs 71,759 rupees ($1,673) a kilolitre in Mumbai, compared with 47,045 rupees in January. The latest price is equal to about $6.32 a gallon.