Airlines Warn of Service Shutdown Amid Soaring Fuel Costs and Policy Concerns

Indian airlines warn of possible service disruptions as aviation fuel prices surge due to global tensions, increasing operational losses and prompting urgent appeals to the government for financial relief.

April 29, 2026 | Mumbai: India’s aviation sector is facing mounting pressure as airlines warn they may be forced to suspend operations due to a sharp rise in aviation turbine fuel (ATF) prices, triggered by escalating tensions in West Asia. The situation has significantly increased operational costs, making international flight services increasingly unviable, according to the Federation of Indian Airlines (FIA).

Airlines report that ATF prices have surged dramatically since the outbreak of conflict involving the United States and Iran, with rates rising by over ₹1 lakh per kilolitre. This spike, coupled with the weakening of the Indian rupee against the US dollar, has intensified financial strain on carriers already operating on thin margins.

The FIA has expressed serious concern, stating that unless immediate government intervention is provided, airlines may have no option but to halt services. Such a move could severely disrupt travel plans during the peak summer holiday season, leaving thousands of passengers stranded. Fuel expenses, which typically account for 30–35 percent of airline operating costs, have now escalated to nearly 55–60 percent due to the recent price hike. While the government has capped the increase in domestic ATF prices to ₹15 per litre, international fuel rates have reportedly surged by ₹73 per litre, further worsening the situation for global operations.

Airlines have urged the government to bring ATF under a pricing mechanism similar to petrol and diesel, arguing that such regulation could stabilize costs and ensure sustainability. Notably, ATF constitutes only around 4 percent of India’s total petroleum output, strengthening the case for controlled pricing. Meanwhile, the central government has clarified that there are no immediate plans to increase petrol and diesel prices, despite global crude oil volatility. However, the aviation sector continues to seek targeted relief measures to navigate the ongoing crisis.

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