Government Shields Domestic Airlines from Sharp Jet Fuel Price Surge Amid Global Energy Crisis

On Wednesday morning, the state-owned Indian Oil Corporation doubled aviation turbine fuel (ATF) prices in Delhi to Rs 2.07 lakh per kilolitre for April. Hours later, the price was reduced to Rs 1.04 lakh per kilolitre. The government stated that it would allow only a partial increase after it emerged that prices for the domestic market were expected to rise by over 100 per cent from April 1, 2026. This decision, it said, was aimed at shielding domestic airfares from steep hikes.

Public sector oil marketing companies, in consultation with the Ministry of Civil Aviation, have implemented only a partial and staggered increase in ticket prices. Domestic airlines will face a limited hike of around 25 per cent, or approximately Rs 15 per kilolitre, instead of the full pass-through of global price increases, according to the government. However, airlines operating international routes will bear the full increase in line with global market-linked pricing.

Aviation Minister Ram Mohan Naidu said the calibrated approach would protect passengers and support the aviation sector. He stated that the move would shield passengers from sharp fare increases, ease the burden on domestic airlines, and maintain stability in the aviation sector at a crucial juncture. He further noted that the measure would benefit the broader economy by ensuring smooth cargo movement and sustaining critical air connectivity for trade and logistics.

The US-Israel war on Iran, which began on February 28 and rapidly escalated into strikes on energy infrastructure and a blockade on tanker traffic through the Strait of Hormuz, has disrupted the global energy market. The near-total closure of the key waterway, responsible for shipping a fifth of the world’s oil and gas supply, has choked exports and triggered a surge in prices due to widening disruptions.

The potential full increase in jet fuel prices would have imp

osed a heavy burden on local airlines already operating on thin margins. Airlines across the region have also been affected, with carriers from Vietnam to New Zealand cancelling flights as costs surged. China, the world’s largest oil importer, has curtailed fuel exports to secure domestic supply.

The government’s intervention underscores the significance of maintaining aviation stability amid global uncertainty, balancing economic pressures while safeguarding passengers and critical connectivity.