New Delhi: India’s aviation sector is staring at a fresh financial crisis as surging Aviation Turbine Fuel (ATF) prices and geopolitical tensions place severe pressure on airlines, prompting an urgent appeal for government intervention.
In a strongly worded letter to the Ministry of Civil Aviation, the Federation of Indian Airlines (FIA), representing major carriers including Air India, IndiGo and SpiceJet, warned that some airlines could face shutdown risks or be forced to suspend operations if relief measures are not introduced immediately.
The industry body said a sharp rise in fuel costs, coupled with taxation pressures and currency depreciation, has made operations increasingly unsustainable.
According to the FIA, while domestic ATF price hikes were capped at Rs 15 per litre last month, international ATF prices jumped by Rs 73 per litre, creating what airlines described as a severe pricing imbalance that has made both domestic and overseas operations financially unviable.
The pressure has intensified amid the West Asia conflict, which pushed global crude prices sharply higher and sent aviation fuel costs soaring.
The airline body said fuel, which traditionally accounted for around one-third of operating expenses, now makes up nearly 60 per cent of costs, putting carriers under unprecedented strain.
Describing the situation as “precarious and challenging,” the FIA said rising fuel bills, airspace disruptions and rupee weakness have combined to worsen losses.
Seeking urgent relief, the federation has urged the government to restore the earlier “crack band” pricing mechanism to regulate refinery margins and bring stability to ATF rates.
It has also demanded temporary suspension of excise duty on aviation fuel, arguing that the tax burden is compounding the crisis as prices rise.
The industry has further raised concerns over high VAT rates on ATF in major aviation hubs, calling fuel taxation a major obstacle to operational viability.
Warning of serious fallout if corrective action is delayed, the FIA said airlines may be forced to reduce flights, cut routes and shrink networks, potentially affecting passenger connectivity across the country.
The appeal underscores mounting stress in the aviation sector at a time of strong travel demand but escalating cost pressures, with airlines urging swift government action to prevent wider disruption.
