West Asia War Impact: Why Indian Aviation Needs An Ecosystem Approach

Aircraft are the most expensive depreciating assets on the balance sheet of airlines; their value is maximised when they are in the air, moving passengers on the most direct route possible. The current crisis has introduced operational friction that destroys this efficiency, writes aviation expert and AT-TV Managing Partner Satyendra Pandey.

The Indian aviation sector, posed to be one of the most consequential aviation markets of the next twenty years, is currently navigating a “Perfect Storm.” The root cause is the West Asia war which has left airlines to juggle multiple challenges including the troika of rising fuel prices, a falling rupee and a large-scale reduction in flights to the Gulf — usually the most profitable sector for India’s airlines. The promise of India’s 9%-12% annual passenger growth is now being clouded by a brutal compression of unit economics. As the conflict escalates, there is a fundamental decoupling of top-line growth from bottom-line viability. The entire sector is facing fragility and how this is addressed remains to be seen. Rising fuel prices and shifting breakeven pointsAs of April 2026, the Brent crude benchmark has breached the $120 per barrel resistance level, with a corresponding surge in jet fuel crack spreads. For Indian carriers, fuel expenses—which historically hovered around 40% of OpEx—have now ballooned to nearly 55%. The math is alarming. In India, ATF is not a pass-through cost in the immediate term due to price sensitivity. So airlines have to carefully consider how to manage this cost. In the meantime, there is a significant impact on unit economics reflected in the CASK (Cost per Available Seat Kilometer). Specifically:

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