India’s aviation sector is facing growing financial pressure as the Federation of Indian Airlines has made an urgent appeal to the government. The industry is struggling with rising operational costs and economic imbalance.
The federation warned that major carriers like Air India, IndiGo, and SpiceJet may be forced to reduce services or halt operations if fuel costs continue to rise. This has raised concerns across the sector.
In a letter to Aviation Secretary Samir Sinha, the FIA described the situation as serious and unsustainable. It highlighted the sharp increase in aviation turbine fuel prices as the main issue.
In April 2026, base ATF prices for domestic flights were capped at a 25 percent increase. However, international operations saw a surge of over 100 percent, creating imbalance in airline cost structures.
The FIA has requested rationalised pricing and temporary relief measures. It has called for suspension of the 11 percent excise duty on domestic ATF and a reduction in high VAT rates.
Currently, VAT on ATF is as high as 25 percent in Delhi and 29 percent in Tamil Nadu. Other major hubs like Mumbai, Bengaluru, Hyderabad, and Kolkata impose VAT between 16 and 20 percent.
Fuel costs now account for 55 to 60 percent of airline operating expenses, compared to 30 to 40 percent earlier. This sharp increase is putting significant strain on airline finances.
The rise in costs is linked to the ongoing West Asia conflict, rupee depreciation, and airspace restrictions. These factors have collectively impacted the aviation industry.
The FIA has warned that without immediate government intervention, airlines may face heavy losses. This could lead to flight cancellations, grounded fleets, and disruption of connectivity across the country.
