India's government is concerned about the impact of rising jet fuel prices on the financial health of airlines, and will explore options to ease pressure on the carriers, the civil aviation minister said on Monday.
State-run Indian Oil, the country's largest jet fuel supplier, has raised fuel prices by 18.6 percent, effective from June 1, and its domestic prices have now risen nearly 90 percent since last June, mirroring a surge in global crude rates.
"The impact of rising fuel prices is going to hurt the aviation sector in a large way," Praful Patel told reporters. "I have informally been told by airlines they would like to prune their services, rationalize their services."
Patel said while jet fuel prices have risen 5-6 times since 2004, competition from a string of new airlines has pushed passenger fares lower, adding this was a "mismatch".
"All airlines in India have been expressing their helplessness," the minister said.
He said 45 percent of airlines' operating costs were due to fuel. "That will rise further with the hike in prices," Patel said.
He plans to meet Finance Minister Palaniappan Chidambaram and the prime minister soon, while a committee of secretaries will explore all options to provide relief to the sector.
Patel added that the issue of whether to relax rules governing which domestic carriers can fly abroad could also be discussed.
Currently, domestic carriers with 5 years of experience and a fleet of 20 aircraft are allowed to fly to overseas destinations. Private carriers are demanding that the time period be reduced to three years.
