The Federation of Indian Airlines (FIA), representing Air India, IndiGo, and SpiceJet, has warned that the aviation industry may be forced to shut down operations and cancel flights if the government does not provide urgent support.
In a letter to the Civil Aviation Ministry, the FIA stated, "The dire condition of the Aviation Sector has been exacerbated by the West Asia War and the exorbitant increase in the price of ATF," adding that immediate assistance is required for ATF pricing to allow airlines to continue operations.
The spike in Aviation Turbine Fuel (ATF) pricing comes amid soaring crude oil prices. The ongoing US-Iran war has resulted in a blockade of the Strait of Hormuz, a key passage for around one-fifth of the world's energy supply. Since fuel accounts for over 50 per cent of airlines' operational costs, the increase not only raises operating expenses but also makes it harder for carriers to maintain balanced ticket pricing.
The airlines have also urged the ministry to defer the excise duty on ATF, which is at 11 per cent. "With the abnormal increase in ATF prices from the pre-crisis period, adding rupee depreciation to the increased prices, the 11 per cent excise duty also increases manifold for the airlines and adds to the ATF price as a big impact on airlines," it said.
In March, the government capped ATF price increases at Rs 15 per litre for domestic operations. However, for international routes, the price rose by Rs 73 per litre, which the FIA says makes the operations "completely unviable." The federation added that the April 2026 pricing outcomes "do not ensure parity between domestic and international operations," leading to significant losses.
Pressure is particularly acute on international routes, where rising fuel costs threaten the viability of some flights and erode margins for Indian carriers competing with foreign airlines operating out of low-cost hubs.
The FIA also noted that ATF costs, which normally comprise 30-40 per cent of airline operating costs, have surged to 55-60 per cent due to the fuel price increase. "Add to this, the rupee has also depreciated further to its lowest level, adding additional burden on Airlines in terms of ATF pricing," the body added.
