India’s airport tariff regulator has directed major airports to cut landing and parking charges by 25% for domestic flights for three months, offering relief to airlines hit by financial strain from the Iran war, a Reuters report said. This comes after carriers such as IndiGo and Air India requested to rationalise airport fees.
The two airlines are under pressure due to a double blow from the Iran war, on top of existing restrictions that bar them from flying over Pakistan.
According to airline lobby group International Air Transport Association, airport and air navigation service charges were the third largest expense category for airlines globally after fuel and labour, hinting that that these cut might bring slight relief to the airlines.
The Airports Economic Regulatory Authority of India (AERA), acting on the government’s directions, said the temporary reduction in charges will apply immediately and any under-recoveries in revenue will be addressed in future tariff reviews.
IndiGo shares surged as much as 10% on Wednesday, hitting the upper circuit, as airline stocks rallied after the US announced a two-week ceasefire with Iran
Jet fuel cost to remain elavated for some time
Jet fuel costs and airfares are likely to remain elevated for some time even though two-week ceasefire between the US and Iran looks positive for the aviation industry, said Willie Walsh, head of the global airline body.
“Even two weeks is a positive because we will see some flow of oil return,” Walsh, who will take over as chief executive officer of Indian budget carrier IndiGo later this year, said in an interview with Bloomberg Television.
However, jet fuel prices “will remain elevated for some time,” he said. “If crude has come down 16% you like to think jet will come down by a similar figure but it’s still going to be a high price, that will mean higher ticket prices. It is inevitable.”
Crude oil prices fell as much as 16% to below $100 a barrel Wednesday after US President Donald Trump announced the ceasefire with Iran, which agreed to open the Strait of Hormuz as as part of the deal. Still, it will take time for shipping to resume in earnest, with more than 800 vessels stuck in the Persian Gulf.
Carriers globally are grappling with a more than doubling of jet fuel costs since the war broke out, and the threat of supply shortages in some regions has forced some airlines to reduce services
(With inputs from Reuter and Bloomberg)
