Why airlines are sending SOS over ATF price surge

The Federation of Indian Airlines, a grouping of Air India, IndiGo and SpiceJet, has told the government that rising aviation fuel pricing difference in the domestic and international sector has rendered the airline network financially unsustainable.

The FIA in a communication to the Ministry of Civil Aviation (MoCA) on April 26 raised operational challenges being faced by domestic carriers due to rising aviation fuel prices and that it is on the verge of stopping operations or grounding aircrafts, amidst unprecedented surge in the ATF (aviation turbine fuel) prices.

It urged the government to reinstate the crude brent pricing mechanism, introduced post Covid-19 in 2022, suspending the 11% excise duty on ATF and reduce VAT on aviation fuel in major states.

The fuel cost has risen from 40% to 60% for the airlines, due to the rising ATF prices. “Today the airlines are in a very difficult, precarious and challenging situation,” the FIA said, adding that carriers have managed to sustain operations despite mounting pressures.

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Crude oil prices rose sharply (by 45.5% MoM in March 2026) due to the West Asian conflict, the pass‑through to ATF prices was moderated. The MoCA capped domestic ATF price increases at 25% MoM,  the oil marketing companies (OMCs) raised ATF prices by only 9.2% sequentially in April 2026 for domestic operations, tempering the immediate cost impact on the aviation sector.

However, the ATF hike was steep for international operations of domestic airlines. Crude oil prices remain elevated, which can impact ATF prices in the future, said ICRA in its monthly outlook for aviation.

The price hike of ATF was capped at Rs 15 per litres while international ATF prices rose by Rs 73. ATF prices have risen sharply from $87.24 per barrel and are currently trading above $235 per barrel.

The association cautioned that failure to address fuel pricing concerns could force airlines to rationalise capacity, reduce network deployment and curtail connectivity, affecting passengers and regional access.

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To support the industry, in April 2026, the MoCA announced a reduction in the landing and parking charges for domestic airlines by 25% for three months starting April 2026. The centre is also mulling an emergency airline credit scheme of Rs 5,000 crore to provide a big relief to the airline sector.

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