India’s major airlines, including Air India, IndiGo and SpiceJet, have warned that rising jet fuel prices and geopolitical disruptions in global air routes are pushing the aviation sector into a serious financial crisis.
The warning was issued through the Federation of Indian Airlines (FIA), which represents these carriers, in a letter to the Ministry of Civil Aviation. The industry body said airlines are operating under “extreme stress” and may be forced to cut flights or even ground aircraft if immediate relief is not provided.
Airlines say sector is “on the verge of shutdown”
In its letter dated April 26, the FIA said the situation has become critical.
It stated, “The airline industry in India is under extreme stress and is on the verge of closing down or stopping operations.”
The federation warned that rising aviation turbine fuel (ATF) prices, combined with currency depreciation and longer international routes due to airspace restrictions linked to conflict in West Asia, are making operations unsustainable.
It further cautioned, “Any irrational increase in the price of ATF will result in unsurmountable losses and may lead to grounding of aircraft and cancellation of flights.”
Fuel costs now account for nearly 40% of expenses
Airlines said jet fuel has become their biggest cost burden, accounting for almost 40% of total operating expenses.
They pointed out that crude oil price volatility following tensions in the Iran-West Asia region, along with disruptions in key air corridors, has sharply increased fuel consumption due to longer flight routes.
The FIA said, “Jet fuel prices have grown considerably, and the gap between crude oil and ATF is severely impacting airline operations.”
International routes hit hardest
The airlines said international operations are currently “completely unviable” due to longer detours and higher fuel burn. Domestic operations are also under pressure due to rising input costs.
They added that government-controlled pricing differences have worsened the situation. While domestic ATF price hikes have been capped at around ₹15 per litre, international fuel costs have increased by nearly ₹73 per litre.
Demand for tax cuts and relief measures
The FIA has urged the government to suspend the 11% excise duty on ATF temporarily, arguing that the tax burden has become unmanageable under current conditions.
It said, “With the abnormal increase in ATF prices and rupee depreciation, the 11% excise duty adds a significant additional burden on airlines.”
The federation also flagged high state-level VAT on aviation fuel. It noted that cities like Delhi impose 25% VAT, while Tamil Nadu levies 29%, and major aviation hubs such as Mumbai, Bengaluru, Hyderabad, and Kolkata charge between 16% and 20%.
Industry seeks urgent intervention
The airlines have called for immediate financial relief and a more uniform fuel pricing structure across domestic and international operations.
They also suggested restoring a pricing mechanism similar to earlier “crack band” models to stabilise the gap between crude oil and refined fuel costs.
The crisis, according to the airlines, has been worsened by global instability affecting oil supply routes such as the Strait of Hormuz, through which a significant portion of the world’s crude oil passes.
Aviation sector under growing pressure
Indian carriers, which operate extensive international networks across West Asia, Europe, and North America, have been particularly affected by rerouted flights, longer travel times, and rising fuel consumption.
Industry leaders say that without urgent policy support, the sector could face severe disruptions, including reduced flight schedules and potential grounding of aircraft.
