Crude even at $90 'unsustainable': SpiceJet's Ajay Singh warns of impact on Indian carriers

Ajay Singh, Chairman and Managing Director of SpiceJet Ltd., has warned that Indian airlines may need to reconsider their growth plans due to the high cost of crude oil, which he considers unsustainable above $90 per barrel.

In an interview with Bloomberg on Tuesday, Singh expressed concern over rising fuel costs and their potential impact on the aviation sector. “We don’t know where things are really going,” he said, referring to the volatile oil market.

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Singh added that domestic fares are unlikely to remain stable, as airlines may be forced to introduce fuel surcharges due to rising fuel costs.

According to a Bloomberg report, Indian airlines have already raised fares on international long-haul flights by about 15% due to the increase in jet fuel prices.

Singh also indicated that domestic flights could see similar price hikes in the future.

The Indian aviation industry, highly sensitive to price fluctuations due to the competitive and price-conscious nature of the market, will face additional challenges as fuel costs rise.

Oil prices have been rising mainly due to escalating geopolitical tensions in the West Asia, especially with the ongoing conflict involving the US, Israel, and Iran.

The Strait of Hormuz, a vital shipping route where a significant portion of the world's oil passes through, has been at the center of these tensions. Attacks on key oil infrastructure and the threat of further disruptions in this region have led traders to push up prices, adding a risk premium to crude. This has caused Brent crude to surge above $100 per barrel.