Indian Airlines seek government aid over rising fuel prices

Indian Airlines seek government aid over rising fuel prices

Indian airlines are currently under significant financial pressure due to a sharp rise in Aviation Turbine Fuel (ATF) prices, largely driven by the ongoing conflict in West Asia. The Federation of Indian Airlines (FIA), representing major carriers like Air India, IndiGo, and SpiceJet, has formally appealed to the Ministry of Civil Aviation for urgent intervention, warning that the extreme cost environment threatens their operational viability.

Current Industry Challenges

The aviation sector is facing severe strain as soaring fuel costs, which typically account for about 40% of an airline’s total operating expenses, push several routes to become financially unviable. Carriers have cautioned that if these elevated fuel prices persist, they may be forced to reassess their operations, including potential route cuts, to manage severe cash flow pressures. This situation has intensified as global oil market volatility and airspace restrictions in West Asia continue to drive up operating expenses.

Government Intervention Efforts

To mitigate the impact of rising global fuel prices, the Indian government had previously implemented a 25% cap—limiting the increase to ₹15 per litre—on ATF price hikes for domestic flights starting April 1, 2026. This measure was intended to prevent the need for additional fuel surcharges and keep domestic travel costs manageable. However, the industry argues that further support is necessary to navigate the ongoing volatility.

Requested Relief Measures

In their recent outreach to the government, the industry body has proposed several structural and immediate fiscal measures to alleviate the crisis:

• Tax Relief: A temporary removal of the 11% excise duty on ATF.

• VAT Reduction: A push for states to reduce Value Added Tax (VAT) on jet fuel, which currently reaches up to 25% in certain locations.

• Pricing Mechanisms: The establishment of a more predictable, long-term pricing mechanism for jet fuel to reduce reliance on volatile refining margins and crack spreads.