Airlines warn of shutdown risk
Indian carriers say the situation has reached a breaking point.
“The airline industry in India is under extreme stress and on the verge of closing down or stopping operations,” the Federation of Indian Airlines said in a letter to the government.
The body, which represents major carriers including Air India, IndiGo and SpiceJet, warned that any further increase in fuel prices could lead to aircraft being grounded and flights being cancelled.
Fuel accounts for up to 40 per cent of an airline’s operating costs, making the sector highly vulnerable to price shocks.
Relief at home, pressure abroad
By holding domestic fuel prices steady, the government has offered some breathing space for local routes, where demand is more price sensitive.
However, the increase in international fuel costs is likely to put further pressure on long-haul operations — a key segment for Indian expatriates travelling to and from the Gulf.
Airlines operating overseas routes are already facing higher expenses due to a weaker rupee, which increases dollar-denominated costs such as aircraft leases and airport charges.
Why fuel is so expensive in India
Despite producing enough jet fuel domestically, India prices ATF at import parity — effectively treating it as if it were imported from the Gulf.
This means airlines pay for notional freight, insurance, and customs duties, making fuel significantly more expensive than at hubs such as Dubai, Singapore, and Kuala Lumpur.
However, authorities have taken some steps to ease the burden.
India has capped monthly fuel price increases at 25 per cent and temporarily reduced airport charges. It has also cut export taxes on jet fuel for early May to improve supply availability.
But airlines are pushing for more support, including a return to pandemic-era cost caps and tax relief.
