New Delhi : India’s airline industry has sought urgent government intervention as a sharp rise in jet fuel prices begins to strain operations and push up costs. The Federation of Indian Airlines (FIA), which represents carriers such as Air India, IndiGo and SpiceJet, warned that the sector is facing “extreme stress” due to soaring aviation turbine fuel (ATF) prices.
At the centre of the concern is the sharp rise in ATF prices, which have crossed Rs 2 lakh per kilolitre in recent revisions, tracking the surge in global crude oil prices amid tensions in West Asia. Aviation fuel, which typically accounts for around 30–40% of airline costs, has now risen to as much as 55–60% of operating expenses, according to the industry. The FIA flagged that airlines are struggling to absorb the increase, particularly on international routes, where fuel costs are higher and pricing flexibility is limited.
The industry body has sought a set of immediate and structural measures. As an immediate step, it has asked the government to temporarily remove the 11% excise duty on ATF and push for a reduction in state-level VAT, which can go as high as 25% in some locations. At a structural level, airlines have called for a more predictable pricing mechanism for jet fuel, arguing that volatility in refining margins, or crack spreads, is keeping ATF prices elevated even when crude oil prices ease.
Airlines told the government that even on days when crude softens, ATF prices remain high, making it difficult to plan routes, capacity and pricing. The trigger for the current surge lies outside India. The ongoing war in West Asia has pushed global crude oil prices higher, with concerns around supply routes such as the Strait of Hormuz adding to uncertainty.
The industry has warned that if the situation persists, airlines may be forced to cut capacity, rationalise routes or adjust fares. The impact is already beginning to show globally, with several carriers indicating that sustained high fuel costs could lead to fare increases.
In India, airlines have so far absorbed part of the increase, but industry executives say there is limited room to continue doing so if costs remain elevated. The implications are pretty straightforward. Higher fuel costs typically feed into ticket prices over time. Airlines may also reduce frequency on routes that become difficult to sustain.
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