Star Air has curtailed its weekly flight schedule by 15 to 20 percent down to 52 flights as Aviation Turbine Fuel surges. Jet fuel currently accounts for around 40 percent of overall airline operational expenses, severely straining operators running small fleets. With regional carriers consuming just 3 percent of the country's total jet fuel, industry leaders are pushing for a tiered fuel stabilization model to protect routes under schemes like Udaan.
Key points
Regional carriers are seeking a revived Price Stabilisation Fund with tiered pricing to s…: Regional carriers are seeking a revived Price Stabilisation Fund with tiered pricing to shield connectivity initiatives like Udaan.
The government has yet to decide on reintroducing fuel relief initiatives after an earlie…: The government has yet to decide on reintroducing fuel relief initiatives after an earlier stabilization scheme lapsed.
High fuel prices place disproportionate pressure on regional airlines because they cannot…: High fuel prices place disproportionate pressure on regional airlines because they cannot easily pass cost spikes to passengers.
Sources checked by our analysis pipeline: 1
Currently, Star Air has a fleet of eight Embraer regional planes.
Rising Aviation Turbine Fuel (ATF) prices, especially in the wake of the West Asia crisis, are significantly affecting airlines and pushing operational costs higher.
Against this backdrop, the executive said there could be a special fuel pricing mechanism for regional carriers, as they cannot pass higher prices on to passengers.
Regional carriers use just around 3 per cent of the total ATF, and a Price Stabilisation Fund (PSF) with better terms to deal with rising jet fuel prices would help, according to the executive.
In the PSF, there could be a "lower deck... for airlines which operate specific routes under Udaan or something like that have a special pricing of X to maintain connectivity," the executive said.
To help airlines facing high ATF costs, the government earlier this year introduced the PSF scheme, which has now lapsed. The government is yet to take a call on coming out with the PSF scheme again.
Jet fuel costs account for around 40 per cent of an airline's operational expenses.
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