BackECONOMY
Indian airlines warn Centre of flight cancellations over fuel crisis amid West Asia conflict
The Federation of Indian Airlines warned of possible flight cancellations due to surging ATF prices amid the West Asia conflict, in a letter dated April 26. Earlier on April 1, ATF prices were hiked, with the government stepping in the same day to cap domestic rates. The FIA asked for three relief measures ahead of the May 1 ATF revision.
Why It Matters
ATF accounts for 30-40% of airline costs, and the surge pushed fuel's share of operating costs to 55-60%, threatening viability and potentially affecting flights and services across India.
Timeline
3 Events
FIA letter warns of flight cancellations and seeks relief (April 26, 2026)
April 26, 2026
The Federation of Indian Airlines (FIA), in a letter dated April 26, warned that the surge in ATF prices could lead to cancellations and grounding of aircraft, threatening operations. It called for urgent government action before the next ATF revision on May 1. The FIA outlined three requests: (1) revert to the crack band mechanism—a transparent pricing framework with a band of $12-22 per barrel; (2) temporarily defer excise duty on ATF (11%); and (3) reduce value-added tax on ATF in key states, noting Delhi at 25% VAT and Tamil Nadu at 29%. The letter also argued that the April price hike had made international operations unviable, and cited factors such as West Asia conflict-driven fuel cost pressures, higher ATF costs (MOPAG-based index), currency depreciation, and airspace restrictions increasing fuel burn and flight distances.
Government intervention moderates domestic ATF price increase
April 1, 2026
On the same day, the government intervened to moderate the domestic ATF increase to 8.6%, bringing the rate for scheduled carriers such as IndiGo, SpiceJet and Air India down to ₹1,04,927 per KL. International ATF prices bore the full increase.
ATF price hike announced by state oil marketing companies
April 1, 2026
State-owned oil marketing companies raised aviation turbine fuel prices for domestic carriers by 114.55%, from ₹96,638 per kiloliter to ₹2,07,341 per KL in Delhi, and for foreign carriers by 107%, from $816.91 per KL to $1,690.81 per KL.