Panic in India as entire airline industry ‘on brink of collapse’ | World | News
The country’s leading industrial body warns the sector is under ‘extreme stress’ (Image: Getty)
Federation of Indian Airlines (FIA) has requested urgent assistance from the Ministry of Civil Aviation, stating that current jet fuel prices are causing extreme stress in the industry. This stress has brought the airline industry to the brink of collapse, FIA, the leading industry body representing leading domestic airlines such as IndiGo, SpiceJet and Air India, said in a letter to the centre.
“The airline industry in India is under extreme stress and is on the verge of shutting down or discontinuing its operations. The dire situation of the Aviation Industry has worsened due to the West Asian War and the exorbitant rise in ATF price. [Aviation Turbine Fuel],” the letter reads.
The federation added that operations had become “completely unsustainable” as the ATF price had increased by R73 (£0.60) per liter on both international and domestic flights.
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FIA represents major domestic airlines in India, including IndiGo and Air India (Image: Getty)
The FIA said this price increase led to “significant losses for the aviation industry in April 2026”. Hindustan Times.
The airline added that the April 2026 pricing results “do not ensure parity between domestic and international operations.”
The revision of aviation turbine fuel prices comes amid an oil and gas supply crisis caused by the US and Israel’s war against Iran. The ongoing conflict has led to the blockade of the Strait of Hormuz, a vital choke point for approximately 20% of the world’s energy supply.
The war increased the price of Brent crude oil from $72 (£58) per barrel to $118 (£96) per barrel. As a result, the ATF price (MOPAG and Premium) rose from $87.24 (£70) to $260.24 (£211) per barrel – a 295% increase – and is now trading at $235.63 (£190) per barrel. The FIA added that this marks a significant increase compared to pricing in March 2025.
Rising jet fuel prices increased airline operating costs (Image: Getty)
The airline said ATF pricing is typically around 30-40% of the airline cost. However, with the increase in prices due to the US-Iran war, the increase in ATF costs has now pushed airline operating costs to 55-60%.
“In addition, the depreciation of Rupee to its lowest level has also brought additional burden on Airlines in terms of ATF Pricing,” the organization said.
In response to the ongoing crisis, the airline body has presented three important recommendations to the government. These include restoring the crack band in line with a pre-agreed formula that expresses the margins that refineries make when converting crude oil into finished products. They also called for a temporary postponement of the excise tax on ATF, currently set at 11% for domestic operations.
Finally, the airline body has been demanding a reduction in VAT for key states like Delhi and Tamil Nadu, pointing out that cities like Mumbai, Bangalore, Hyderabad and Kolkata, which cover more than 50% of airline operations in India, currently face VAT rates ranging from 16% to 20%.
“Consistent application of the same framework will ensure equity, reduce financial burden and enable Indian airlines to compete more effectively with their global counterparts,” he said.
