Air India and IndiGo to cut domestic flights from June 1 amidst rising ATF costs

India’s two largest airlines, Air India and IndiGo, which together control over 90% of the domestic aviation market, are reportedly planning to reduce their flight operations from June 1 for a period of 3 months, according to reports.

The decision comes amid a sharp rise in Aviation Turbine Fuel (ATF) prices following global geopolitical tensions and the US-Iran conflict, coupled with a seasonal dip in travel demand after the end of the school holiday period.

As per reports, Air India is expected to cut up to 15% of its domestic flights, while IndiGo may reduce between 5% and 7% of its overall services. ATF accounts for nearly 40% of an airline’s operating cost, making fuel price fluctuations a major factor in route planning and scheduling.

A senior Air India official said the airline operates around 3,800 flights per week, and the cost of ATF for domestic operations has increased from around ₹80,000 per kilolitre to over ₹1 lakh, with variations across states due to differing VAT structures.

The official added that continuing operations at current fuel prices is becoming financially unsustainable. However, the airline reportedly does not plan to cancel routes entirely, instead opting to reduce frequency on select sectors.

Routes likely to be affected include Mumbai–Ahmedabad, Mumbai–Nagpur, Mumbai–Patna and Mumbai–Bhopal. From Delhi, flights to Hyderabad, Bengaluru and Kolkata are also expected to see reductions, along with corresponding return services.

IndiGo, which operates nearly 1,950 daily flights, is also preparing to trim capacity. The airline reportedly expects lower occupancy after the peak travel season, prompting a temporary adjustment in schedules rather than route closures.

The aviation sector has also been impacted by recent changes in state-level taxation on jet fuel. Delhi has reduced VAT on ATF from 25% to 7% for six months, while Maharashtra has also announced a temporary reduction to 7% until November.

Experts note that the combined impact of higher fuel prices and fluctuating demand could lead to continued volatility in domestic airfares and flight availability over the coming months.