India’s leading airlines have issued an urgent appeal to the Ministry of Civil Aviation. The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, addressed the soaring aviation turbine fuel (ATF) prices, warning that the current cost environment could threaten the viability of operations across the sector.
In a letter, as cited by CNBC TV-18, the airlines called for immediate intervention and said that “urgent support is required for ATF pricing to continue airline operations.” It also cautioned that the carriers are facing unprecedented financial strain, describing the situation as one where the sector is “under extreme stress” and at risk of halting operations if conditions persist.
Fuel cost surge strains operations
According to FIA, volatility in ATF pricing has disrupted both domestic and international operations, making route planning increasingly difficult. It also criticised the existing pricing mechanism, saying ad-hoc revisions are distorting route economics and rendering airline networks “unviable and unsustainable.”
The impact has been severe on international routes, where ATF prices have surged by Rs 73–75 per litre. The FDA said that the sharp rise has turned several overseas routes loss-making, weakening Indian carriers already competing with foreign airlines operating from lower-cost hubs.
Cost structures hit hard
The spike in fuel prices has altered airline cost structures. FIA also noted that ATF now accounts for nearly 55-60% of total operational costs, up from 30-40% earlier, creating what it termed “non-operatable conditions” for airlines.
The body also noted high refining margins, or crack spreads, as a key factor keeping ATF prices elevated despite softer global crude oil trends. It argued that refinery margins have increased disproportionately, preventing airlines from benefiting from any easing in crude prices.
Relief measures sought
FIA has sought immediate relief and urged the government to temporarily suspend the 11% excise duty on ATF for domestic operations, reduce VAT in key aviation hubs, and reintroduce a “crack band” pricing mechanism to stabilise fuel costs. The body said the current tax structure is exacerbating the burden on airlines, especially since excise duty is levied as a percentage of fuel prices.
Warning of wider disruptions
FIA warned that continued volatility in ATF pricing could lead to aircraft being grounded and flight cancellations. It added that the fallout could extend beyond airline balance sheets, impacting connectivity, ticket prices and overall schedule stability.