Iran war: Air India CEO warns flights may have to be cut as costs surge while there's a limit to fares hikes

NEW DELHI: Beware the ides of March. This line of Shakespeare has come to haunt airlines globally, and more so those in India, as they brace for impact of the imploding Israel-Iran war. Air India CEO Campbell Wilson Friday told employees “the financial impact of this crisis is yet to be fully felt, as although the spot price of jet fuel has more than doubled, most of the impact will only hit us from next month.”

He has warned escalating operating costs may force more airlines to cut flights “depending on how fuel costs, airfares and customer demand moves.” The rupee touching new life-lows on a daily basis adds to the dollar-denominated costs of airlines, including fuel for international flights of Indian carriers. On top of that routes to and from the west have become much longer.

While airlines have introduced or hiked fuel surcharge, the CEO says in his weekly message “not every customer is willing to pay higher airfares so there is a limit to how high we can price before demand drops. Additionally, given economic uncertainties, it is not certain that customers or companies will be as willing to travel as they were prior to the conflict, and may choose to stay put for a while.”




“There will be pockets of new demand, such as we're seeing on - and deploying additional flights to -some Europe and North America cities, but already airlines in some parts of the world are reducing some flights due to high fuel prices. Depending on how fuel costs, airfares and customer demand moves, we may also have to adjust,” he says.

“….Though some of our competitors in the Gulf are even more affected than us, the impact on Air India Group is significant given the usual scale of our operations to, and through, the Middle East. In the three weeks since the conflict started we have had to cancel around 2,500 flights to the region. As of today, we can operate only around 30% of our normal Middle East schedule because airports and/or airspace are closed, or are assessed to be beyond our safety thresholds. Other flights, to the UK, Europe and North America, are being rerouted even further from the already-longer flightpaths we've been using since the Pahalgam event last year, consuming more fuel and adding more time,” Wilson says.

With costs spiralling and flights being cancelled, AI will “focus on safe operations, keep tighter-than-ever control of non-urgent or unnecessary expenditure…”

“… volatility in schedules and our network is extremely unfortunate for everyone, but it is done with the safety of our crew and customers as the overriding priority. Thank you to everyone.… I would especially like to acknowledge and send our wellbeing wishes to all Air Indians who are physically in the affected Middle East areas

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