Air travel is likely to remain expensive in the near term as airlines continue to navigate elevated jet fuel prices, high airport charges, and operational hurdles.
Speaking on the challenging aviation environment, IndiGo CEO Willie Walsh warned that high crack spreads—the difference between crude oil and jet fuel refining costs—are keeping aviation turbine fuel (ATF) prices disproportionately high.
While crude oil trades at around $110 per barrel, the crack spread has spiked to nearly 65%, far exceeding the long-term historical average of 22%.
Walsh attributed this disparity to global refining supply bottlenecks, particularly in European and Middle Eastern refineries. With ATF accounting for nearly 40% of IndiGo’s operating expenses, the sustained price pressure presents a major hurdle for the low-cost carrier.
Beyond fuel, Walsh raised concerns over high taxes and rising airport charges, which surged 4% quarter-on-quarter. Terming airports as effective monopolies, he urged authorities to lower charges to support market growth. Operational friction has been further compounded by the ongoing closure of Pakistan’s airspace, forcing route adjustments and service reductions to destinations like Saudi Arabia.
Despite these cost headwinds, IndiGo remains focused on tight expense management while eyeing expansion opportunities at the upcoming Navi Mumbai airport for its long-haul operations.
