Major Indian airlines have asked the state oil companies to postpone hikes in jet fuel prices for domestic flights until the Middle East crisis is over, Bloomberg reported on Tuesday, quoting sources with knowledge of the development.
India’s oil marketing companies (OMCs) have raised the prices of jet fuel for international flights, which have more than doubled compared to before the Iran war. But they haven’t raised the prices for domestic flights, yet.
A decision is expected by June 1, with state oil companies considering a 25% increase. They are now discussing the idea to postpone the hike proposed by the airlines including Air India, IndiGo, and SpiceJet, according to Bloomberg’s sources.
The airlines are asking for delayed price hikes in order to limit losses on their jet fuel costs, which have surged since the war in Iran began. While jet fuel prices for domestic flights haven’t increased, prices of jet fuel for international flights doubled in April.
Airlines are also lobbying for preferential tax treatment as oil costs make up about 40% of all their costs.
Meanwhile, after holding off on price hikes for more than two months since the Iran war started, Indian state marketing companies on Tuesday raised the prices of road transport fuels for the second time in less than a week.
Since the war in the Middle East began and cut off over 40% of India’s crude oil flows, those that passed through the Strait of Hormuz, one of the highest-flying economies in Asia has seen its oil import bill soar, investors fleeing the capital market, and the local currency plunging to an all-time low against the U.S. dollar. The squeeze in energy supply has been particularly acute in liquefied petroleum gas, but the oil crunch has also affected India’s economy.
The Indian government, meanwhile, is urging people to travel less in order to conserve energy or use public transport and carpooling. India has 69 days’ worth of crude oil stocks and 45 days of LPG supply, according to the country’s oil minister.
By Tsvetana Paraskova for Oilprice.com
