Airlines Warn of Shutdown Risk as ATF Prices Surge Amid Middle East Crisis
India’s aviation sector has raised a red flag over soaring fuel costs, warning that operations could be severely impacted if urgent relief is not provided. Leading carriers, including Air India, have approached the Centre seeking intervention on aviation turbine fuel (ATF) pricing.
The appeal was made through the Federation of Indian Airlines, which represents major domestic carriers like IndiGo and SpiceJet. In a letter to the Civil Aviation Ministry, the body cautioned that rising ATF prices—accounting for nearly 40% of airline operating costs—are pushing the industry towards “insurmountable losses.”
The airlines warned that arbitrary or uneven pricing between domestic and international fuel rates could lead to grounded aircraft and widespread flight cancellations.
One of the key demands is the reintroduction of a uniform pricing mechanism, commonly known as a “crack band,” to prevent extreme fluctuations between crude oil and refined ATF prices. Currently, while domestic ATF prices have seen a capped increase, international fuel prices have surged sharply, putting additional pressure on long-haul operations.
Airlines have also sought temporary relief through a reduction or deferment of the 11% excise duty on ATF, stating that the combined impact of rising fuel costs and a weakening rupee is significantly increasing their financial burden.
The crisis has been triggered by escalating geopolitical tensions, particularly the conflict involving Iran and disruptions around the Strait of Hormuz. The vital shipping lane, through which nearly 20% of global oil supply passes, has seen instability, affecting fuel availability and pricing worldwide.
Any prolonged disruption in this region could have a cascading effect on global oil markets, especially for Asian economies like India that rely heavily on imports.
The airlines have urged the government for immediate financial support and policy intervention to ensure continuity of operations and prevent large-scale disruption in the aviation sector.
