Indian airline industry warns the ‘whole sector is on verge of collapse’ over jet fuel
According to a report from The Mirror, India’s aviation sector faces an existential threat as surging jet fuel prices, triggered by the escalating US-Iran conflict, push major carriers toward unsustainable operations.
According to a report from The Mirror, India’s aviation sector faces an existential threat as surging jet fuel prices, triggered by the escalating US-Iran conflict, push major carriers toward unsustainable operations.
The Federation of Indian Airlines (FIA), representing key domestic players including IndiGo, SpiceJet, and Air India, has issued a stark warning to the Ministry of Civil Aviation.
The group states the entire industry stands on the brink of shutdown, with April 2026 already delivering significant losses due to unrelenting cost pressures.
Jet fuel costs have skyrocketed by Rs.73 (about £0.60) per litre for both domestic and international flights, rendering operations “completely unviable.”
The FIA attributes the crisis directly to the West Asia conflict, which has disrupted global oil supplies through a blockade of the Strait of Hormuz—a vital chokepoint carrying roughly 20% of the world’s oil.
Brent Crude prices have surged from $72 to $118 per barrel, driving Aviation Turbine Fuel (ATF) costs from $87.24 to a peak of $260.24 per barrel before settling at around $235.63.
“The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations,” the FIA declared. “The West Asia War and the exorbitant increase in the price of ATF have exacerbated the dire condition of the Aviation Sector.”
Aviation fuel typically comprises 30-40% of airline expenses, but that share has ballooned to 55-60% amid the turmoil. A weakening rupee has compounded the burden, further eroding financial stability for carriers.
In a bid to avert disaster, the FIA has urged immediate government intervention: restoring refinery margins under a pre-agreed “crack band” formula, temporarily suspending the 11% excise duty on ATF for domestic flights, and cutting VAT rates in high-traffic states such as Delhi and Tamil Nadu.
Major hubs including Mumbai, Bangalore, Hyderabad, and Kolkata—accounting for over half of India’s airline operations—currently face VAT between 16% and 20%.
“Applying the same framework consistently will ensure parity, reduce the financial burden and enable Indian airlines to compete more effectively with global counterparts,” the federation added.
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