ATF Price Stabilization Fund Seen as Promising Solution to Airlines' Fuel Costs Concerns: IATA

India's ATF Price Stabilisation Fund Seen as a Good Solution to Higher Jet Fuel Costs

The Indian government's decision to set up an up to Rs 10,000 crore ATF (Aviation Turbine Fuel) price stabilisation fund is a welcome move to address the problem of rate uncertainties faced by airlines, according to a senior executive of the International Air Transport Association (IATA).

Hemant Mistry, Director Energy Transition at IATA, noted that the current jet fuel scenario globally is unprecedented in terms of the cost impact. The situation is so extreme that if it continues, there would have to be more flight reductions, he warned. Mistry cautioned that the only way to manage the situation is through demand destruction, which refers to a reduction in flights amid rising operational costs, driven by higher jet fuel prices.

The IATA represents over 370 airlines, including Air India, IndiGo, Air India Express, and SpiceJet, accounting for around 85% of the global air traffic. The grouping is currently facing unprecedented jet fuel prices, with the average price increasing from USD 96 per barrel in November last year to USD 188 per barrel in April this year, before settling at around USD 156 per barrel.

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Mistry pointed out that the Indian government's decision to set up the ATF price stabilisation fund will address the problem of rate uncertainties faced by airlines. The fund for Oil Marketing Companies (OMCs) will help provide ATF price stabilisation support to scheduled Indian airlines for their domestic and international operations.

The move is seen as a positive step by Sheldon Hee, Regional Vice President Asia Pacific at IATA, who said that any support that the industry gets from the government is welcome. However, he also noted that there are different dynamics for domestic airlines that ensure connectivity between cities in the country.

Note: The above table represents a sample of flight data for the airlines mentioned and is not an exhaustive list.

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