Air India Is Behind on Its Fuel Bills and Its Suppliers Are Cutting It Off

Three government-owned Indian oil companies earlier this month decided to stop supplying fuel to state-run Air India at six airports on the subcontinent, because the carrier has been unable to pay its bills.

The airline has long been in dire financial straits. It has billions of dollars in debt, and even when the government tried to sell the company off into privatization, there were no takers. It continues to limp along, but the decision by the national oil companies is a stark sign of its continuing troubles.

"It's more than embarrassing when oil companies cut off a state-owned airline for non-payment of bills — it's alarming," said Henry Harteveldt, a travel industry analyst and founder of Atmosphere Research. "It brings into question everything about the airline, including, importantly, its ability to maintain its aircraft, its ability to ensure its crews are trained the way they're supposed to be."

Related: How Much Does It Cost to Fuel up an Airliner?

Air India told local media that its newly restricted fuel supply would not affect operations. An airline official said that flights to the six airports where refueling is now prohibited are loaded with enough fuel for the return legs as well. Long-haul flights are not affected by the restrictions, and there's currently no sign of passengers being stranded by planes with empty fuel tanks.

For Harteveldt, though, the news remains a troubling sign about the airline's general financial health. He also pointed out that these refueling restrictions could make passengers wary about booking travel on Air India, even if the airline's operations aren't noticeably affected.

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"News like this may affect consumer confidence in booking the airline, especially for business travelers who want to be sure their flights will operate," Harteveldt said. "If business travelers book away or book away in larger numbers than they may already be doing, that cuts away a key source of profitable business for Air India."

Related: What Is Jet Fuel, and How Does It Work?

Such booking shortfalls could lead to a continuing cascade of financial trouble for the airline.

"If this problem continues to intensify, at what point does Air India start to cut back on flying, reduce the number of frequencies it operates, drop routes, drop destinations?" Harteveldt said.

In the end, he continued, the fuel supply problem is "yet another nail in the Air India coffin."

"No airline has been able to shrink its way into profitability," Harteveldt said, "and this news will intensify consumer concern and further reduce consumer confidence in booking the airline."

Related: 20 Things I Hated About My Air India Business-Class Flight to NYC

Related: 10 Reasons I'm Glad I Gave Air India Another Chance