|
Airlines must be allowed to recover their cost of capital as rising airport charges and investments add to their operating expenses and contribute to airfares, IndiGo CEO Willie Walsh said, calling for greater scrutiny of airport investments and their impact on the aviation industry.
We have to be able to return our cost of capital as an airline. Or else we can't sustain the investment, he said. Walsh further added that every component of an airline's cost base affects the prices it can offer passengers, and airport charges should not be viewed as insignificant when compared with fuel expenses. Every aspect of your cost base contributes to the ticket prices that you'll be able to offer your customers, he said. He also questioned airport investments that may not be required by airlines or passengers but increase the investment base on which airport operators expect returns. He pointed out that airports are often accepted as profitable businesses, while airlines face criticism when they generate profits, highlighting the need for a balanced approach towards returns across the aviation value chain. On the broader cost outlook, Walsh warned that airlines could continue to face pressure from high jet fuel prices even if crude oil prices decline, as constraints in refining capacity have pushed up the cost of aviation fuel. He said the difference between crude oil and refined jet fuel prices, known as the crack spread, is currently around 65 per cent, significantly above the average of around 22 per cent recorded between 2000 and 2025. Walsh attributed the elevated spread partly to disruptions in refining capacity, particularly in Europe, where some refineries have closed or reduced jet fuel production. I've never seen anything like this, he said, adding that the pressure could persist for some time as refining capacity adjusts. Turning to India's aviation ambitions, Walsh said the country has the potential to develop multiple international hubs, including in Delhi, Mumbai and Bengaluru. However, he stressed that closer coordination between airlines and airport operators would be necessary. For the hub to be successful, for the hub to grow, you need both an efficient hub airport and you need an efficient hub carrier, he said. Walsh said India had recorded strong domestic and international passenger growth over the years and that its long-term aviation outlook remained promising. (ANI)
|
