India’s airline industry has sought urgent government intervention as a sharp rise in jet fuel prices begins to strain operations and push up costs.
In a letter to the Civil Aviation Ministry, the Federation of Indian Airlines (FIA), which represents carriers such as , and SpiceJet, warned that the sector is facing “extreme stress” due to soaring aviation turbine fuel (ATF) prices.
The industry body said the current cost environment is making several routes financially unviable and could force airlines to reassess operations if prices remain elevated.
At the centre of the concern is the sharp rise in ATF prices, which have , tracking the surge in global crude oil prices amid tensions in West Asia.
Aviation fuel, which typically accounts for around 30–40% of airline costs, has now risen to as much as 55–60% of operating expenses, according to the industry.
That shift has significantly squeezed margins.
In its letter, the FIA flagged that airlines are struggling to absorb the increase, particularly on international routes, where fuel costs are higher and pricing flexibility is limited.
Airlines also warned that sustained high fuel prices are beginning to strain cash flows, adding to financial pressure across the sector. The industry body has sought a set of immediate and structural measures.
As an immediate step, it has asked the government to temporarily remove the 11% excise duty on ATF and push for a reduction in state-level VAT, which can go as high as 25% in some locations.
At a structural level, airlines have called for a more predictable pricing mechanism for jet fuel, arguing that volatility in refining margins, or crack spreads, is keeping ATF prices elevated even when crude oil prices ease.
This mismatch between crude and jet fuel prices has become a key concern.
Airlines told the government that even on days when crude softens, ATF prices remain high, making it difficult to plan routes, capacity and pricing.
The industry body has also flagged that India’s high fuel taxes put domestic carriers at a disadvantage compared to global peers, affecting competitiveness, particularly on international routes.
The trigger for the current surge lies outside India. The ongoing war in West Asia has , with concerns around supply routes such as the Strait of Hormuz adding to uncertainty.
For airlines, that translates directly into higher fuel bills. The industry has warned that if the situation persists, airlines may be forced to cut capacity, rationalise routes or adjust fares.
The impact is already beginning to show globally, with several carriers indicating that sustained high fuel costs could lead to fare increases.
In India, airlines have so far absorbed part of the increase, but industry executives say there is limited room to continue doing so if costs remain elevated.
For passengers, the implications are pretty straightforward. Higher fuel costs typically feed into ticket prices over time. Airlines may also reduce frequency on routes that become difficult to sustain.
The FIA’s letter makes one point very clear. The current situation is not just about rising costs. It is about viability. If fuel prices remain elevated and taxes unchanged, the pressure on airlines is likely to intensify, with a direct impact on fares, routes and overall capacity.