‘Flights May Be Cancelled’: Airline Body Writes To Govt Amid Fuel Price Surge

India’s airline industry has sought immediate government intervention, warning that soaring fuel costs could force flight cancellations and aircraft groundings. In a letter to the civil aviation ministry, the Federation of Indian Airlines said carriers are under severe financial strain as aviation turbine fuel prices have surged sharply due to global crude volatility. The industry cautioned that without swift relief measures, operations could become unsustainable, particularly on international routes already running at a loss, raising concerns over wider disruption to air connectivity.

Fuel Shock Hits Airlines

The Federation of Indian Airlines, which includes Air India, IndiGo and SpiceJet, has flagged a sharp rise in aviation turbine fuel (ATF) prices as the key concern.

According to the industry body, global disruptions linked to the West Asia conflict have pushed Brent crude prices from around $72 per barrel to $118. This has driven ATF prices from roughly $87 per barrel to over $260, before easing slightly to about $235 -a steep increase of nearly 295 per cent.

Airlines also highlighted the surge in the “crack spread”-the gap between crude oil and ATF prices-which has jumped from $11-18 per barrel to around $132. The FIA argues that such levels are unjustified and effectively translate into excessive profits for oil companies.

Also Read: Rupee Slides Near 94.40 Mark As Crude Oil, Dollar Demand Weigh

Costs Soar, Losses Deepen

The spike in fuel prices has significantly altered airline cost structures. ATF, which typically accounts for 30-40 per cent of total operating costs, has now risen to as much as 55-60 per cent.

International routes have been hit hardest, with airlines reporting sustained losses. The situation has been compounded by a weakening rupee, increasing the burden of dollar-denominated expenses and further squeezing margins.

Relief Demands Outlined

The FIA has proposed three key measures to ease the crisis:

• Restore crack band mechanism: Reinstate the October 2022 system that capped the gap between crude and ATF prices, discontinued in December 2024.
• Cut excise duty: Temporarily suspend or reduce the 11 per cent excise duty on ATF for domestic flights.
• Reduce VAT: Lower state-level VAT, currently as high as 25 per cent in Delhi and 29 per cent in Tamil Nadu, with major metro cities accounting for over half of airline operations.

The industry has warned that without prompt intervention, capacity cuts may become unavoidable, potentially disrupting travel demand and economic activity.

Also Read: Oil Shock Deepens: Goldman Raises Brent Forecast To $90 Amid Hormuz Crisis

Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: abplive.com