New Delhi: India’s aviation sector is facing a fresh financial strain as steep increases in aviation turbine fuel (ATF) prices begin to impact both domestic and international flight operations amid global geopolitical tensions and currency pressure.
The Federation of Indian Airlines (FIA) has written a strongly worded letter to the civil aviation ministry, warning that airlines could be forced to scale down or suspend operations if immediate relief is not provided. The body represents major carriers such as Air India, IndiGo and SpiceJet.
According to FIA, the sharp rise in fuel costs and pricing imbalance led to heavy losses in April 2026. While the government capped the increase in domestic ATF prices at ₹15 per litre last month, international ATF prices surged by ₹73 per litre, creating a significant disparity. Airlines say this imbalance has made operating both domestic and global routes financially unviable.
The crisis has been worsened by tensions in West Asia, which pushed Brent crude oil prices from $72 per barrel to $118 per barrel. ATF prices also spiked sharply, at one point reaching around $260 per barrel.
Fuel now accounts for up to 60% of airline costs
FIA noted that ATF, which earlier accounted for 30–40% of airline operating costs, has now risen to nearly 55–60%. Airlines are struggling to sustain operations amid rising fuel prices, restricted air routes, and geopolitical disruptions.
The weakening Indian rupee has further increased the burden, while suppliers are also seeking cost revisions due to rising petrochemical prices—deepening the financial stress on the sector.
Call for tax relief and pricing reforms
In its appeal, FIA urged the government to reintroduce the earlier “crack band” pricing mechanism to stabilise fuel rates. This system, introduced post-Covid, was discontinued in December 2024 after prices had stabilised.
The body also argued that current refinery margins are excessively high and not fully justified by input cost increases. Additionally, airlines have demanded a temporary suspension of the 11% excise duty on ATF, stating that the percentage-based tax structure worsens financial pressure when fuel prices rise.
The industry has warned that without swift intervention, the ongoing crisis could significantly disrupt India’s aviation network.
