India’s aviation industry has sought urgent financial relief from the Centre, warning that a sharp escalation in aviation turbine fuel (ATF) prices triggered by geopolitical tensions in West Asia has pushed airlines into a deep financial crisis.

Industry representatives say continued volatility in global fuel markets, linked to the United States-Israel war on Iran and disruptions in fuel trade, has significantly increased operating costs and threatened the sustainability of airline operations.

The Federation of Indian Airlines (FIA), which represents major carriers such as Air India, IndiGo and SpiceJet, has written to the Union Ministry of Civil Aviation requesting immediate government intervention.

The industry body has cautioned that the prevailing fuel pricing environment has placed airlines under severe stress and could force operational shutdowns if corrective steps are not taken quickly.

“In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide over the current situation,” it said in the letter dated April 26, NDTV reported.

The federation stated that rising fuel costs have rendered international routes financially unsustainable, noting that ATF prices for overseas operations have increased by Rs 73 per litre. Domestic routes are also facing mounting pressure as higher fuel prices significantly raise overall operating expenses.

According to the airline body, aviation turbine fuel typically accounts for around 30-40% of total operating costs but this has now risen to between 55-60% due to the surge in prices. The industry has also pointed out that depreciation of the Indian rupee has compounded the problem by inflating input costs further.

“With the abnormal increase in ATF prices from the pre-crisis period, adding rupee depreciation to the increased prices, the 11% excise duty also increases manifold for the airlines and adds to the ATF price as a big impact on airlines,” the federation said, according to NDTV.

Airlines have requested a temporary deferment of the excise duty on ATF, arguing that the tax burden increases automatically with rising fuel prices. The federation has also called for a uniform pricing structure for aviation turbine fuel across domestic and international operations to ensure operational viability.

“… Any ad hoc pricing (domestic vs international) and/or irrational increase in the price of ATF will result in insurmountable losses for airlines and will lead to grounding of aircraft, resulting in cancellation of flights,” the FIA said, according to the NDTV report.
“The April ’26 pricing outcomes do not ensure parity between domestic and international operations,” the airline body said, according to Hindustan Times.

The industry’s concerns follow a recent government decision to increase ATF prices by Rs 15 per litre for domestic operations and by Rs 73 per litre for international routes.

The federation has further highlighted disparities in state-level taxation, noting that Delhi levies a 25% value-added tax on jet fuel, while Tamil Nadu imposes the highest rate at 29%. Other major aviation hubs such as Mumbai, Bengaluru, Hyderabad and Kolkata maintain VAT rates ranging between 16% and 20%, collectively accounting for more than half of airline operations in the country.

Industry representatives argue that escalating fuel costs, combined with inconsistent taxation and currency pressures, have sharply eroded airline margins.

With global oil supply routes such as the Strait of Hormuz facing disruptions and crude prices remaining volatile, airlines have warned that failure to introduce immediate relief measures could result in grounded aircraft, large-scale flight cancellations and significant disruption to both domestic and international connectivity.