India’s leading carriers — Air India, IndiGo and SpiceJet — have warned they could be forced to halt operations and have sought urgent government support as soaring fuel costs threaten the sector’s survival.
The airlines, through industry body Federation of Indian Airlines (FIA), have written to the civil aviation ministry outlining measures to avoid ‘unsurmountable losses’ and prevent aircraft from being grounded.
Carriers are facing a double blow: a sharp rise in aviation turbine fuel (ATF) prices and longer flight paths due to war-related airspace restrictions. Fuel alone accounts for nearly 40 per cent of airlines’ operating costs, making the surge in prices particularly damaging.
The ongoing turmoil in West Asia has pushed up global oil prices, while restricted airspace has increased flying time and operational expenses, especially on long-haul international routes. The FIA noted that the widening gap between crude oil prices and ATF rates is severely impacting airline viability.
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Highlighting the gravity of the situation, the federation said any arbitrary pricing differences between domestic and international fuel or irrational hikes in ATF rates would lead to heavy losses, grounding of aircraft, and widespread flight cancellations. “In order to survive, sustain and continue operations, we request urgent and meaningful financial support to tide over the current crisis,” the FIA said in its April 26 communication.
Among key demands, airlines have urged the government to temporarily suspend the 11 per cent excise duty on ATF, arguing that rising fuel prices combined with rupee depreciation have significantly increased their cost burden. Last month, authorities capped the increase in ATF prices for domestic flights at Rs 15 per litre, while rates for international operations jumped by Rs 73 per litre — further widening cost pressures.
Airlines warned that the current pricing environment has rendered both domestic and international operations ‘completely unviable’, leading to significant financial losses across the sector in April. The FIA also pointed to structural issues, noting that Delhi — the country’s largest aviation hub — levies a high value-added tax (VAT) of 25 per cent on jet fuel, second only to Tamil Nadu at 29 per cent. Other major aviation hubs such as Mumbai, Bengaluru, Hyderabad and Kolkata impose VAT rates between 16 and 20 per cent.
These six cities together account for over half of the country’s airline operations, making high fuel taxation a critical challenge. “The airline industry in India is under extreme stress and is on the verge of shutting down or suspending operations,” the federation warned, urging immediate intervention to stabilise the sector.
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