Air India Draws Up Plans to Mitigate Fuel Crisis Amid Shrinkage in Market Share

Strategic Insights -

Amid a severe shortage of jet fuel supply and accumulating operational expenses, Air India has devised a plan to save fuel by combining flights across various sectors from mid-June. The carrier owes a substantial sum of Rs2,250 crore to oil marketing companies, and with fuel prices cheaper at hubs like Dubai, London, and Bangkok, Air India is looking to tank up at these locations to get around the situation. The airline has also decided to curtail 13 of its services, including flights on the Delhi-Mumbai and Chhattisgarh routes, as the lean season approaches.

Key Takeaways:

  • Air India plans to combine 13 flights across various sectors from mid-June to mitigate its fuel shortage, saving approximately Rs2,250 crore in jet fuel supply costs.
  • The carrier has decided to tank up on fuel at hubs like Dubai, London, Paris, Frankfurt, and Bangkok, where fuel prices are significantly cheaper.
  • Air India has curtailed 13 of its services, including flights on the Delhi-Mumbai and Chhattisgarh routes, to reduce fuel consumption and operational expenses.
  • The airline owes Rs2,250 crore to three oil marketing companies for unpaid fuel supplies.
  • Air India also owes Rs217.08 crore to Delhi International Airport Ltd (DIAL) and Rs35.89 crore to GMR Hyderabad International Airport Limited (GHIAL) on account of airport charges.
  • The carrier is urging the government to clear an estimated Rs1,150 crore worth of dues on account of VVIP movements and evacuation flights, including those to Libya.
  • Air India continues to face market share shrinkage and creditor claims, prompting a request for a Rs1,200 crore equity infusion into the company.

Statistics:

  • Air India owes a total of Rs2,250 crore to three oil PSUs ((Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd).
  • The airline owes Rs217.08 crore to DIAL and Rs35.89 crore to GHIAL on account of airport charges.
  • Air India's estimated unpaid dues to be cleared by the government stand at Rs1,150 crore.
  • The carrier is seeking a Rs1,200 crore equity infusion into the company to address its financial woes.

Sources:

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