West Asia conflict: Financial impact yet to be fully felt; check unnecessary expenses, Air India CEO tells staff

Mumbai/New Delhi: The Air India Group has been significantly impacted by the Middle East conflict and the financial impact is "yet to be fully felt", according to Air India chief Campbell Wilson, who has also stressed the need for having a tighter-than-ever control of unnecessary expenditure.

Air India and Air India Express have been grappling with operational disruptions like other airlines since the start of the conflict involving the US, Israel, and Iran on February 28.

"In the three weeks since the conflict started, we have had to cancel around 2,500 flights to the region. As of today, we can operate only around 30 per cent of our normal Middle East schedule because airports and/or airspace are closed, or are assessed to be beyond our safety threshold," Wilson said in a message to the staff on Friday.

The airline's flights to the UK, Europe, and North America, are also taking longer flight paths due to airspace restrictions in the region, resulting in more fuel consumption.

Wilson said the impact on Air India Group is significant given the usual scale of its operations to, and through, the Middle East.

According to Wilson, the financial impact of this crisis is yet to be fully felt, as although the spot price of jet fuel has more than doubled, most of the impact will only hit the group from next month.

Given economic uncertainties, he said it was not certain that customers or companies would be as willing to travel as they were prior to the conflict, and may choose to stay put for a while.

"For now, though, we should continue to focus on safe operations, keep tighter-than-ever control of non-urgent or unnecessary expenditure, support each other and keep delivering great Air India service to our customers," Air India's MD and CEO said in the message.

Air India, Air India Express, IndiGo, and Akasa Air have imposed fuel surcharge and charge on tickets amid rising jet fuel costs due to the conflict.

Mentioning the imposition of fuel surcharge, Wilson also said not every customer is willing to pay higher airfares "so there is a limit to how high we can price before demand drops".

"There will be pockets of new demand, such as we're seeing on -- and deploying additional flights to -- some Europe and North America cities, but already airlines in some parts of the world are reducing some flights due to high fuel prices.

"Depending on how fuel costs, airfares and customer demand moves, we may also have to adjust," he added.