India’s top carriers — Air India, IndiGo and SpiceJet — have cautioned the government that the aviation sector is facing severe financial strain and could be pushed to the brink of operational disruption if immediate support is not provided.
ATF Price Surge Puts Pressure on Airlines
In a letter dated April 26, the Federation of Indian Airlines highlighted the sharp rise in Aviation Turbine Fuel (ATF) prices, driven by escalating global crude oil rates amid tensions in West Asia.
ATF constitutes nearly 40% of airline operating costs, making it one of the biggest factors affecting profitability. Airlines warned that the recent spike, particularly in international fuel pricing, has significantly increased the cost of long-haul operations.
Risk of Flight Cuts and Grounded Aircraft
The FIA cautioned that any disparity between domestic and international fuel pricing could lead to “insurmountable losses.” If the situation worsens, airlines may be forced to ground aircraft and cancel flights, potentially disrupting travel services across the country.
Compounding the issue is the depreciation of the Indian rupee, which has further increased operational expenses for carriers already dealing with rising fuel costs.
Industry Seeks Immediate Policy Support
To stabilise the sector, airlines have urged the government to implement a uniform pricing mechanism for ATF and revive the earlier crack band framework to ensure greater transparency in fuel pricing.
They have also requested a temporary waiver of the 11% excise duty on ATF to ease financial pressure.
High VAT Adds to Burden
Airlines pointed out that high state-level VAT on jet fuel — reaching up to 29% in some regions — continues to be a major challenge. The FIA stressed that reducing these taxes could provide immediate relief and improve the viability of operations.
Sector at a Critical Juncture
With costs rising and margins shrinking, India’s aviation industry is at a crucial point. The airlines have emphasised that timely government intervention will be key to maintaining operational stability and preventing widespread disruptions in air travel.
