India’s leading airlines, including Air India, IndiGo and SpiceJet, have warned the Union government that the aviation sector is under severe financial strain and could be pushed towards an operational crisis unless urgent relief is provided on jet fuel pricing.
In a communication to the Union ministry of civil aviation, the Federation of Indian Airlines (FIA) says the industry is facing unprecedented pressure due to a sharp surge in aviation turbine fuel (ATF) prices, driven by global oil volatility and ongoing geopolitical tensions in West Asia.
Fuel costs, which typically account for about 40% of an airline’s operating expenses, have now risen sharply, touching nearly 60% in some cases. Airlines have flagged that the price of ATF for international operations has increased significantly, further widening the gap between crude oil prices and refined jet fuel rates.
The industry body says the steep differential between crude and ATF prices, along with what it termed inconsistent pricing mechanisms, is making airline operations increasingly unviable. It has urged the government to introduce a uniform pricing framework for domestic and international flights, similar to earlier mechanisms, and to review the current taxation structure on jet fuel.
Airlines have also called for the suspension of excise duty on ATF, arguing that the current cost burden is unsustainable. The FIA warned that any further increase in fuel prices or continuation of existing pricing disparities could lead to substantial financial losses, forcing airlines to take drastic steps.
“If conditions do not improve, airlines may be compelled to reduce capacity, cancel flights or even ground aircraft,” the industry body cautioned, indicating that operations on less profitable routes could be the first to be impacted.
The situation has been exacerbated by airspace restrictions linked to geopolitical tensions, which have increased flight times and fuel consumption, particularly on long-haul international routes. At the same time, a weakening rupee has added to cost pressures for carriers that rely heavily on imported fuel.
Industry sources indicated that airlines are closely monitoring the next revision in ATF prices, expected in May, before taking a final call on capacity adjustments. Short-haul and low-demand routes are likely to face the sharpest cuts if fuel prices continue to rise.
While the government has taken some steps to cushion the sector, including reducing parking and landing charges at major airports and capping monthly increases in ATF prices, airlines say these measures are insufficient to offset the current surge in fuel costs.
With India importing more than 85% of its crude oil requirements, the aviation sector remains highly vulnerable to global supply disruptions. The latest spike in fuel prices has once again exposed these structural risks, pushing airlines to seek immediate policy intervention to avoid a deeper crisis.
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