Air India CEO warns of travel demand hit as fuel costs surge, flags possible flight cuts

Air India CEO Campbell Wilson warned airline employees of a possible travel demand squeeze due to the rising cost of aviation turbine fuel and urged for “tighter-than-ever” control on all non-essential spending.

He also cautioned that, depending on how the situation evolves, the airline may have to trim capacity

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In his first remarks on the impact of the ongoing West Asia conflict, in an internal memo on March 20 reviewed by The Hindu, Mr. Wilson noted that Indian carriers have introduced fuel surcharges, which start at around ₹400 for domestic travel and are higher for international routes, to offset escalating fuel costs. However, he cautioned that fare increases have a limit.

“Not every customer is willing to pay higher airfares, so there is a limit to how high we can price before demand drops,” he wrote in an internal communication.

He also flagged the risk of weakening travel sentiment amid wider economic uncertainty. “Given the current climate, customers and companies may be less willing to travel than before the conflict and could choose to defer trips,” he said.

The financial impact of the oil and energy crisis due to the conflict in the Gulf region will only hit next month, Mr. Wilson said. He was referring to the monthly revision in ATF prices by oil manufacturing crisis.

“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 said, in what appear to be early warning signs. United Airlines Scott Kirby said that the airline would be cutting some unprofitable flights over the next two quarters as it was preparing for oil to rise as high as $175 a barrel and remain above $100 until the end of 2027. Scandinavian Airlines is also cutting 1000 flights in April– it operates 800 flights daily.

In the three weeks since the conflict began, Air India has cancelled around 2,500 flights to the region, the CEO wrote. The airline is operating only about 30% of its flights to West Asia due to the closure of airspace and safety concerns.

The airline’s long-haul and ultra-long-haul flights to Europe and North America are now being rerouted along even longer paths than during the Pahalgam episode last April, “consuming more fuel and adding more time,” the CEO said, underscoring the mounting operational strain across Air India’s network.

Amid the disruption, the airline is also seeing “pockets of new demand,” particularly for non-stop services between India and Europe that bypass West Asia. Seizing the opportunity, Air India is operating 118 additional flights on these routes between March 10 and March 28, redeploying larger aircraft from Gulf sectors to long-haul operations.