Falling Rupee puts pressure on airfare: Air India CCO Nipun Aggarwal

The Indian aviation sector has experienced strong growth in recent years, but the weakening rupee and rising dollar present challenges for the industry.

"The falling rupee does put pressure on our cost structure, as most of our costs are in dollars," said Nipun Aggarwal, Chief Commercial Officer of Air India, during a recent roundtable discussion with journalists.

"The more the rupee falls, the more pressure it puts on costs and profitability. Air India has some particular advantages, as we fly international routes and can charge in international currency. But not everything is priced in overseas currency. We do have some impact, but the edge kind of balances it," Aggarwal added.

The depreciation of the rupee is compounded by rising oil prices, which have caused jet fuel prices to increase. This has placed additional pressure on Indian airlines, which are struggling to maintain competitive fare structures while managing higher operational costs.

Economists have highlighted the broader implications of the falling rupee, warning that inflationary pressures could rise, potentially stifling demand across sectors, including air travel. Aggarwal noted that these financial pressures could impact consumer demand, making it more difficult for airlines to operate in such a challenging market.

"It impacts profitability and puts pressure on the market, which in turn impacts demand. It definitely is a challenge," Aggarwal concluded, underscoring the difficult balance airlines must maintain amid these economic hurdles.

On January 9, 2025, the Indian rupee hit a record low of 85.9325 against the US dollar, before closing at 85.8475