The country’s premier industry body has warned the sector is under ‘extreme stress’ (Image: Getty)
The Federation of Indian Airlines (FIA) has pleaded for urgent assistance from the Ministry of Civil Aviation, stating that current jet fuel pricing is causing extreme stress on the industry. In a letter to the Centre, the FIA, a premier industry body which represents major domestic airlines including IndiGo, SpiceJet and Air India, said this stress has brought the airline industry to the brink of collapse.
“The airline Industry in India is under extreme stress and is on the verge of closing down or of stopping its operations. The dire condition of the Aviation Sector has been exacerbated by the West Asia War and the exorbitant increase in the price of ATF [Aviation Turbine Fuel],” the letter reads.
The federation added that due to the increase in the price of ATF by Rs.73 (£0.60) per litre for both international and domestic flights, operations have become “completely unviable”.
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The FIA represents major domestic airlines in India including IndiGo and Air India (Image: Getty)
This price increase has resulted in “significant losses for the aviation sector in April 2026,” the FIA said, according to the Hindustan Times.
The April 2026 pricing outcomes “do not ensure parity between domestic and international operations,” the airline body added.
The revised prices for aviation turbine fuel come amid the oil and gas supply crisis brought on by the US and Israel’s war on Iran. The ongoing conflict has led to a blockade of the Strait of Hormuz, a vital passage for around 20% of the world’s energy supply.
The war has driven the price of Brent Crude up from $72 per barrel (£58) to $118 per barrel (£96). Consequently, the ATF price (MOPAG and Premium) has surged from $87.24 (£70) to a high of $260.24 (£211) per barrel – a 295% increase – and is currently trading at $235.63 (£190) per barrel. This marks a significant rise compared to the pricing in March 2025, the FIA added.
Increased jet fuel prices have pushed up airline operating costs (Image: Getty)
The airline body said ATF pricing is usually around 30-40% of the airline’s cost. However, with pricing rising due to the US-Iran war, the increase in ATF costs has now pushed airline operating costs to 55-60%.
“Add to this, the Rupee has also depreciated further to its lowest level, adding additional burden on Airlines in terms of ATF Pricing,” the body noted.
In response to the ongoing crisis, the airline body has presented three key recommendations to the government. These include the reinstatement of the crack band in line with a pre-agreed formula, which refers to the margins refineries make when converting crude oil into final products. They have also called for a temporary deferment of the excise duty on ATF, which is currently set at 11% for domestic operations.
Finally, the airline body is requesting a reduction in VAT for key states like Delhi and Tamil Nadu, pointing out that cities such as Mumbai, Bangalore, Hyderabad, and Kolkata—covering over 50% of airline operations in India- currently face VAT rates ranging from 16% to 20%.
“Applying the same framework consistently will ensure parity, reduce the financial burden and enable Indian airlines to compete more effectively with global counterparts,” it said.
