Air India to cut domestic flights by 22% as Iran war pushes fuel costs higher

The cuts will affect Air India's domestic operations for June and July, while decisions for August are yet to be finalised.

In Short

• Air India to cut domestic flights by 22% in June and July
• Fuel price rise due to Iran war hits aviation sector hard
• Air India faces $2 billion loss amid high costs and disruptions

Air India will cut its domestic flight operations by 22% during June and July as soaring jet fuel prices linked to the Iran war continue to hurt airline finances, reported news agency Reuters.

The move comes at a time when the aviation industry is struggling with sharply higher fuel costs after tensions in West Asia disrupted global energy markets.

According to the report, the cuts will affect Air India’s domestic operations for June and July, while decisions for August are yet to be finalised.

The airline confirmed that it has “temporarily rationalised operations on certain domestic routes” between June and August.

“These adjustments are driven by the sustained impact of high fuel prices on overall operations. Air India will continue to monitor demand and operating conditions closely, with a view to restoring frequencies as conditions stabilise,” an airline spokesperson said in a statement quoted by reported news agency Reuters.

IRAN WAR HITS AVIATION INDUSTRY

The Iran conflict has sharply increased global aviation fuel prices over the past few months.

Jet fuel is one of the biggest expenses for airlines and typically accounts for nearly a quarter of operating costs.

The recent surge in fuel prices has forced airlines globally to raise ticket prices, cut unprofitable routes, and reduce flight frequencies.

Indian airlines have been especially vulnerable because of rising crude oil prices, a weakening rupee and longer flying times caused by geopolitical restrictions.

Air India has also been affected by Pakistan’s continued closure of its airspace for Indian carriers, forcing airlines to take longer routes on some international sectors.

AIR INDIA ALREADY UNDER FINANCIAL PRESSURE

The latest operational cuts come shortly after Air India reported an annual record loss of more than $2 billion, according to the Reuters report.

The airline has been undergoing a massive transformation after being acquired by the Tata Group from the Indian government.

The company has invested heavily in aircraft orders, fleet upgrades, route expansion, and integration of operations.

However, the airline’s financial pressure has increased because of elevated fuel prices, strong dollar, operational costs, and geopolitical disruptions.

Air India is jointly owned by Tata Group and Singapore Airlines.

INDIGO ALSO LIKELY TO REDUCE OPERATIONS

The report also said India’s largest airline, IndiGo, may reduce domestic operations by as much as 7% between June and August, according to an earlier report by The New Indian Express.

IndiGo did not immediately respond to Reuters’ request for comment.

The development suggests the pressure from rising jet fuel prices is now affecting the wider Indian aviation sector and not just one airline.

AIRFARES COULD REMAIN HIGH

Industry experts believe domestic airfares could remain elevated if fuel prices continue to stay high.

India imports most of its crude oil requirements, making airlines highly sensitive to global energy price movements.

The Iran conflict has already pushed Brent crude prices sharply higher in recent months, increasing operating costs for airlines globally.

The situation has also raised concerns around inflation, travel costs, and broader pressure on consumer spending.

Air India and its low-cost subsidiary Air India Express together account for around 26.5% of India’s domestic aviation market.

IndiGo continues to dominate the sector with a market share of around 63.3%.

The latest cuts by Air India may create room for rival airlines and foreign carriers to expand capacity on certain routes.

Reductions in Air India’s international operations had already opened opportunities for some foreign airlines to add more flights to and from India.

- Ends