- Aviation industry warns of shutdowns due to extreme fuel costs.
- Airlines seek government intervention on aviation fuel prices.
- High fuel costs make airline networks unsustainable and unviable.
- Industry fears flight disruptions and insurmountable losses ahead.
India’s aviation sector is under “extreme stress” and could face shutdowns or halted operations if fuel costs are not addressed urgently, the Federation of Indian Airlines (FIA) has warned in a letter to the government.
The industry body, representing Air India, IndiGo and SpiceJet, has sought immediate intervention on aviation turbine fuel (ATF) pricing, calling the situation “dire” and unsustainable. The appeal comes as the government prepares to revise ATF prices for May later this week.
Fuel Costs Surge, Industry Seeks Relief
In April, the government capped the increase in base ATF prices for domestic flights at 25 per cent, while prices for international operations rose by over 100 per cent. Airlines say this imbalance has made network planning increasingly difficult.
The FIA has urged the government to rationalise ATF pricing, temporarily suspend the 11% excise duty on domestic operations and reduce high VAT rates across key states, reported Times of India.
Highlighting the burden, the body noted that Delhi, India’s largest aviation hub, levies a 25 per cent VAT on ATF, the second-highest in the country after Tamil Nadu at 29 per cent. Other major hubs such as Mumbai, Bengaluru, Hyderabad and Kolkata impose VAT rates ranging from 16 per cent to 20 per cent. Together, these six cities account for more than half of airline operations in India.
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‘Unviable and Unsustainable’ Operations
In its letter to Aviation Secretary Samir Sinha, the FIA said the current pricing mechanism is creating a “severe imbalance” between domestic and international operations, making airline networks “unviable and unsustainable”.
The situation has worsened due to the ongoing West Asia conflict, which has driven up fuel prices further. ATF, which earlier accounted for 30-40 per cent of airline costs, now makes up as much as 55–60 per cent following the April price hike.
The industry also flagged the depreciation of the rupee and additional operational costs due to airspace closures as compounding pressures.
“Airlines are in a very difficult, precarious and challenging situation,” the FIA said, warning that without immediate financial support, carriers may struggle to sustain operations.
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Warning of Losses, Flight Disruptions
The federation cautioned that high ATF prices could lead to “insurmountable losses”, forcing airlines to ground aircraft and cancel flights.
It also pointed out the absence of a pricing control mechanism for ATF, unlike petrol and diesel, despite fuel accounting for a small share of India’s refinery output. According to the FIA, ATF makes up about 4 per cent of total refinery production, of which only around 30 per cent is used by domestic airlines and 20 per cent by international carriers, with the remaining 50 per cent exported.
Calling for “immediate and meaningful financial support”, the FIA urged the government to act swiftly to prevent further deterioration in the sector and ensure uninterrupted airline operations across the country.
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