The airline has been compelled to reroute several international flights due to airspace closures arising from the West Asia conflict. These longer flight paths have substantially increased fuel consumption, further intensifying operational costs at a time when aviation turbine fuel prices are already under severe pressure.
According to internal estimates, the Air India Group is projected to have incurred losses exceeding ₹22,000 crore in the financial year ending March 31, 2026, underscoring the scale of financial strain facing the carrier.
The airline will scale back services across key international markets, including Europe, North America, Australia, and Singapore, particularly in June. This strategic reduction follows continued assessments of route profitability amid escalating costs.
In a communication to employees, Air India’s outgoing Chief Executive Officer and Managing Director Campbell Wilson stated that a large number of international routes have become financially unsustainable. He noted that continuing operations under current conditions would further deepen losses. He also highlighted that schedule reductions had already been implemented in April and May, but worsening conditions have necessitated additional cuts for June and July.
Wilson described the operating environment as extremely challenging, citing persistent airspace restrictions and elevated jet fuel prices. He further stated that while domestic operations have also been impacted, the effect remains comparatively lower due to government measures limiting domestic fuel price increases to 25 percent.
The airline has attempted to offset rising operational costs through fare increases and fuel surcharges. However, Wilson acknowledged that higher ticket prices have begun to negatively affect customer demand, limiting the airline’s ability to pass on costs indefinitely.
This development comes shortly after the Federation of Indian Airlines submitted a representation to the Ministry of Civil Aviation, warning of severe financial stress across the sector. The federation described current aviation turbine fuel prices as making operations “completely unviable,” noting a steep increase of ₹73 per litre for international operations.
The industry body cautioned that Indian aviation is under extreme financial pressure and at risk of operational disruptions. It further attributed the crisis to the ongoing West Asia conflict and a sharp escalation in fuel prices, particularly in the context of the US-Iran geopolitical tensions.
Aviation turbine fuel, which typically accounts for 30 to 40 percent of airline operating costs, has now risen to nearly 55 to 60 percent due to the recent price surge, significantly eroding airline profitability across both domestic and international sectors.
Air India’s decision reflects the mounting strain on global aviation networks, where geopolitical instability and volatile fuel markets continue to reshape operational viability and strategic planning across major carriers.
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