Major airlines in India have warned the government that they may suspend operations if authorities do not lower jet fuel prices.
The Federation of Indian Airlines (FIA), which represents carriers such as IndiGo, Air India and SpiceJet, said the industry is under extreme stress and nearing a potential shutdown. In a letter to the Civil Aviation Ministry, the group urged the government to restore pandemic-era caps on aviation turbine fuel (ATF) costs and reduce or defer taxes.
Industry concerns have grown amid speculation that Prime Minister Narendra Modi’s administration may increase fuel prices after the conclusion of state elections. While the government recently denied plans to raise petrol prices, it avoided commenting on possible changes to jet fuel rates.
Earlier this month, authorities briefly raised jet fuel prices for domestic flights to a record level before rolling back the increase within hours. Despite this, Indian airlines continue to pay significantly higher fuel prices than carriers in countries like Thailand, Dubai, Malaysia and Singapore due to heavy local taxation.
Although India produces more jet fuel than it consumes, officials still price it on an import-parity basis, factoring in hypothetical costs such as freight, insurance and customs duties as if the fuel were imported.
As the world’s third-largest oil consumer, India remains highly vulnerable to global disruptions, particularly tensions involving Iran and the closure of the Strait of Hormuz — a critical route for global oil shipments.
In its April 26 letter, the FIA warned that any “irrational increase” in ATF prices would lead to severe financial losses, grounded aircraft and widespread flight cancellations.
Airlines emphasised that fuel accounts for up to 40% of operating costs, meaning even small price hikes can sharply impact profitability and ticket fares. At the same time, a weakening rupee has increased dollar-based expenses, including aircraft leasing and international airport charges.
To ease pressure, the government has introduced temporary relief measures, including a 25% cap on monthly jet fuel price hikes and a three-month reduction in landing and parking fees. Officials are also considering offering loans backed by sovereign guarantees.
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