The ongoing tensions in the Middle East have set off alarm bells in India’s aviation sector, with several airlines warning they may be forced to halt operations due to a sharp surge in fuel costs.
At least three carriers, including Tata-owned Air India, have urged the government to revise the pricing of aviation turbine fuel (ATF), which accounts for nearly 40 per cent of an airline’s operating expenses.
In a letter to the Civil Aviation Ministry, the Federation of Indian Airlines cautioned that any arbitrary pricing differences between domestic and international operations, or steep increases in ATF prices, could result in unsustainable losses. “Such a scenario may lead to grounding of aircraft and large-scale flight cancellations,” the body stated.
The FIA, which represents Air India, IndiGo and SpiceJet, has sought urgent government intervention and financial support to help airlines navigate the crisis.
According to the federation, long-haul international flights are the worst affected. As a relief measure, airlines have requested the reintroduction of a uniform fuel pricing mechanism—similar to the earlier “crack band” system—which helped limit extreme differences between crude oil and ATF prices.
Currently, while the government has capped the increase in ATF prices for domestic operations at Rs 15 per litre, international operations have seen a steep rise of Rs 73 per litre.
Airlines have also sought temporary relief in the form of deferment of the 11 per cent excise duty on ATF, stating that the combination of rising fuel prices and rupee depreciation has significantly increased their financial burden.
The crisis stems largely from escalating geopolitical tensions, particularly the conflict involving the United States and Iran, and Iran’s blockade of the Strait of Hormuz—a critical route through which nearly one-fifth of the world’s oil supply passes. Any disruption in this corridor has a direct and significant impact on global oil trade, with ripple effects on sectors like aviation, especially in oil-dependent regions such as Asia.
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