India’s airline industry has sent a Mayday message to the Union Government, warning that it is “on the verge of closing down or stopping operations” amid an unprecedented surge in Aviation Turbine Fuel (ATF) prices.

The call for urgent intervention was conveyed in a letter dated April 26 from the Federation of Indian Airlines (FIA) — whose members include IndiGo, Air India and SpiceJet — to the Ministry of Civil Aviation. businessline has reviewed the communication.

Pricing Distortions

The FIA said the current ATF pricing mechanism has created a severe imbalance between domestic and international operations, rendering airline networks financially unsustainable. The industry, it noted, is under “extreme stress”, with carriers finding it increasingly difficult to sustain operations.

While the government capped the increase in ATF prices for domestic operations at ₹15 per litre, international ATF prices rose by ₹73, sharply widening losses for airlines in April.

Fuel Costs Spiral

According to the FIA, Brent crude prices have surged from about $72 per barrel to $118 amid the ongoing West Asia conflict.

ATF prices, however, have risen far more steeply — from $87.24 per barrel to a peak of $260.24 — and are currently trading above $235 per barrel. The letter also highlighted a sharp widening in crack differentials between Brent crude and ATF, from $11-18 per barrel earlier to over $132 per barrel now.

As a result, fuel costs — traditionally accounting for 30-40 per cent of airline expenditure — have ballooned to nearly 55-60 per cent of operating costs.

Multiple Headwinds

Other factors, including rupee depreciation, airspace closures and higher supplier costs, have compounded the financial strain. Despite these pressures and intermittent geopolitical disruptions affecting airspace access, airlines have continued operations.

“Today, airlines are in a very difficult, precarious and challenging situation,” the FIA said, adding that carriers have managed to sustain operations despite mounting pressure.

The FIA has urged the government to reinstate the crack band pricing mechanism introduced in 2022, temporarily suspend the 11 per cent excise duty on ATF, and reduce VAT on aviation fuel in major States.

Risk to connectivity

The association warned that failure to address fuel pricing concerns could force airlines to rationalise capacity, reduce network deployment and curtail connectivity, affecting passengers and regional access.

It also cautioned that irrational ATF pricing could lead to aircraft being grounded and an increase in flight cancellations.

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Published on April 27, 2026