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War will cause 25pc hike in aircraft fuel
February 2003 178

With war clouds looming over Iraq, the airline industry in India will be hurt badly in case of a US attack which would lead to a massive increase in insurance premium and an additional burden of an estimated 25 per cent hike in aviation turbine fuel (ATF) prices.

A war-risk insurance premium could be very high this time round, official sources said referring to the 1991 Gulf War and recalled that a huge premium of Rs600,000 ($12,000) per flight used to be paid for Indian Airlines' services to Kuwait at that time. "The dollar-rupee exchange rate then was around Rs10. But now with a rate of Rs49-50 per dollar and a hike in insurance premium, even if it is maintained around the 1991 ratio, will impose a massive burden on the carrier," they said.

The increase in insurance burden would particularly hit the domestic carrier more on its Gulf operations where IA now operates many more flights than in 1991.

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