Friday, February 25, 2022

Russia-Ukraine conflict may cloud skies for Indian aviation, warn experts

The Russian military action in Ukraine may stem recovery in the world’s third-largest domestic airline market if the crisis is not resolved early.

Since India curtailed international operations in March 2020, overseas flights from the country can only be operated under “transport bubbles”, a euphemism for temporary air travel accords. Earlier on Thursday, Air India suspended special flights to the Ukraine capital after reports emerged of the Russian air force bombing Kyiv airport.

Some industry experts said that it was still early to assess the full impact of the escalation.

“The real impact of the situation in Ukraine is yet to be ascertained. From an industry perspective, it will have consequences for international travel. However, domestic travel may not be affected to a great extent. A lot will depend on how quickly the government moves in to open up international travel from here on,” averred partner Deloitte India, Sumit Singhania.

However, as brent crude surged to $105 a barrel at 1630 IST, up from the previous close at 8.45 per cent, experts warned of a steep rise in aviation turbine fuel (ATF) prices eroding fourth-quarter earnings of Indian carriers.

“If crude oil prices stay high for some time, it will impact the overall sector. Thus, one needs to watch out for price volatility in the commodity markets to understand the economic impact of the conflict,” remarked practice leader & director, transport and logistics at CRISIL Infrastructure Advisory, Jagannarayan Padmanabhan.

“The consequent rise in ATF prices is an area of concern. But that was not unanticipated as crude prices have been rising steadily over the past few weeks. Fears have been expressed that oil prices could touch the earlier high of more than $140 a barrel. We, therefore, hope the situation soon deescalates. Thus, the next few days will be crucial,” observed Deloitte’s Singhania.

24/02/22 Manish Pant/

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