India’s leading airlines have sounded an urgent alarm to the Centre, warning that surging aviation turbine fuel (ATF) prices—triggered by the ongoing Middle East crisis—could push the sector to the brink of operational shutdown. In a joint appeal, carriers have sought immediate government intervention, citing unsustainable cost pressures and the risk of widespread flight disruptions.
The Federation of Indian Airlines (FIA), which represents major carriers including Air India, IndiGo and SpiceJet, has warned that airlines are “on the verge of stopping operations” if fuel prices continue to rise unchecked. ATF currently accounts for nearly 40 per cent of an airline’s operating cost, making it one of the most critical financial variables for the sector.
In a letter dated April 26 to the Ministry of Civil Aviation, the FIA highlighted that “any ad hoc pricing or irrational increase” in ATF could result in “insurmountable losses,” potentially forcing airlines to ground aircraft and cancel flights. The federation has urged the government to step in with “immediate and meaningful financial support” to help the industry sustain operations during this volatile period.
Long-haul international routes have been identified as the worst affected, with airlines grappling with a sharp disparity in fuel pricing. While the government capped the ATF price increase for domestic operations at ₹15 per litre, international operations witnessed a steep hike of ₹73 per litre. To address this imbalance, airlines have called for the reintroduction of a uniform pricing mechanism—commonly referred to as a “crack band”—which helps limit extreme fluctuations between crude oil and refined ATF prices.
In addition to pricing reforms, the FIA has requested a temporary deferment of the 11 per cent excise duty on ATF. Airlines argue that the combination of elevated fuel prices and rupee depreciation has significantly amplified cost burdens, making the current tax structure increasingly untenable.
The crisis has been exacerbated by geopolitical tensions in the Middle East, particularly the ongoing US-Iran conflict escalation 2026 and Iran’s blockade of the Strait of Hormuz—a critical global energy corridor through which nearly 20 per cent of the world’s oil supply transits. The disruption has sent shockwaves across global oil markets, with Asia-bound supplies particularly impacted.
For India’s aviation sector, which is already navigating tight margins and growing capacity demands, the current situation poses a serious threat to operational continuity. Industry stakeholders warn that without swift policy intervention, the ripple effects could extend beyond airlines, impacting travel trade, tourism flows, and overall connectivity.
As the situation evolves, all eyes remain on the government’s response, which will be crucial in stabilising one of the fastest-growing aviation markets in the world.
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