In a formal communication to the Central Government, the federation stated that the current cost structure has become unsustainable, intensifying pressure on carriers already grappling with global and domestic headwinds. The body asserted that the aviation sector is “on the verge of closing down or stopping operations,” attributing the worsening situation to geopolitical tensions in West Asia and the unprecedented rise in fuel prices.
The federation noted that the ongoing conflict involving the United States and Israel and Iran has significantly disrupted global oil and gas supplies, further aggravated by restrictions affecting the Strait of Hormuz, through which nearly 20 percent of global energy trade passes. This disruption, it said, has directly impacted crude and aviation fuel pricing worldwide.
According to the communication, Brent crude oil prices have surged from 72 US dollars per barrel to 118 US dollars per barrel. Correspondingly, Aviation Turbine Fuel pricing, including MOPAG and premium components, has risen from 87.24 US dollars per barrel to a peak of 260.24 US dollars per barrel, marking an increase of nearly 295 percent. The current trading level stands at 235.63 US dollars per barrel, significantly higher than March 2025 pricing.
The airline body highlighted that the Aviation Turbine Fuel price increase of 73 rupees per litre for international operations has rendered both international and domestic routes financially unviable, leading to substantial losses during April 2026. It further stated that the current pricing structure fails to maintain parity between domestic and international aviation operations.
The federation also pointed out that Aviation Turbine Fuel typically constitutes 30 to 40 percent of total airline operating costs. However, due to the recent surge, this share has now escalated to between 55 and 60 percent, placing extreme pressure on airline balance sheets. Additionally, depreciation of the Indian rupee to record low levels has further increased fuel import costs, intensifying financial burdens on carriers.
In its appeal, the Federation of Indian Airlines has proposed urgent policy interventions, including the reinstatement of crack band mechanisms aligned with pre-agreed formulas to regulate refinery margins, temporary deferment of the 11 percent excise duty on Aviation Turbine Fuel for domestic operations, and reduction of Value Added Tax in key states such as Delhi and Tamil Nadu. It also noted that major aviation hubs including Mumbai, Bengaluru, Hyderabad, and Kolkata continue to impose Value Added Tax ranging between 16 and 20 percent, despite handling more than half of India’s airline operations.
The federation emphasized that uniform application of a balanced fiscal framework is essential to restore parity, reduce financial stress, and enable Indian carriers to remain competitive in the global aviation market.
The crisis, it warned, represents a critical juncture for the aviation industry, with mounting fuel costs and geopolitical instability threatening long-term operational viability.
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