The Federation of Indian Airlines has asked the Ministry of Civil Aviation for immediate support. It warned that high Aviation Turbine Fuel (ATF) prices are putting huge pressure on the airline industry.
In a letter to the government, the body said the situation has pushed airlines close to shutting down.
"The airline Industry in India is under extreme stress and is on the verge of closing down or of stopping its operations. The dire condition of the Aviation Sector has been exacerbated by the West Asia War and the exorbitant increase in the price of ATF," the letter reads.
Fuel Price Hike Hits Operations Hard
The federation said ATF prices have increased sharply. It noted that the price rose by ₹73 per litre for international operations.
This sharp rise has made both domestic and international flights difficult to operate.
"The ATF pricing for international operations was increased by Rs.73 per litre, making practically international operations along with domestic operations completely unviable and resulting in significant losses for the aviation sector in April 2026," said FIA.
It also pointed out that the current pricing system does not treat domestic and international operations equally.
"The April’26 pricing outcomes do not ensure parity between domestic and international operations," the airline body added further.
War in West Asia Drives Fuel Crisis
The rise in ATF prices comes during a major global energy crisis. The conflict involving the US, Israel, and Iran has disrupted oil and gas supply.
The crisis has also led to a blockade of the Strait of Hormuz. This route carries about 20% of the world’s energy supply.
The federation explained how global oil prices have jumped sharply.
"The current conflict has pushed the Brent Crude from US$ 72 / BBL to US$ 118 / BBL, and resultant ATF price (MOPAG + Premium) has moved from US$ 87.24 and touched a high of US$ 260.24 / BBL (295% increase) and is currently trading at US$ 235.63 / BBL, significantly higher as compared to March’25 pricing," the airline body noted.
Costs Rise Sharply for Airlines
Fuel usually makes up 30 to 40 percent of airline costs. However, the recent price surge has pushed this share much higher. The federation said ATF costs now account for 55 to 60 percent of total operating expenses. The weakening Indian currency has added more pressure.
"Add to this, the Rupee has also depreciated further to its lowest level, adding additional burden on Airlines in terms of ATF Pricing," the body noted further.
Airlines Suggest Measures to Government
To deal with the crisis, the federation proposed three key steps to the government. First, it asked for the return of the crack spread system based on a fixed formula. This system helps control refinery margins.
Second, it requested a temporary pause on excise duty on ATF. Currently, the duty stands at 11 percent for domestic flights.
Third, it suggested reducing VAT in major states like Delhi and Tamil Nadu. It highlighted that key aviation hubs such as Mumbai, Bengaluru, Hyderabad, and Kolkata still have VAT rates between 16 and 20 percent.
Call for Policy Stability
The federation said a consistent pricing system will help airlines manage costs better. It also said this will allow Indian carriers to compete globally.
"Applying the same framework consistently will ensure parity, reduce the financial burden and enable Indian airlines to compete more effectively with global counterparts," the FIA added further.