‘Operations at risk’: Airlines write to Centre as ATF crisis deepens

New Delhi: India’s top carriers, represented by the Federation of Indian Airlines (FIA), have raised concerns over a sharp rise in aviation turbine fuel (ATF) prices, warning that the sector is under “extreme stress” and could face disruptions if immediate support is not provided.

The FIA, which includes Air India, IndiGo, and SpiceJet, has written to the Ministry of Civil Aviation seeking urgent intervention to stabilise fuel costs and ensure continued operations.

ATF price volatility disrupts airline operations

According to the industry body, frequent and unpredictable changes in ATF pricing have made both domestic and international route planning increasingly difficult.

Airlines noted that ad-hoc price revisions are distorting route economics, with several routes becoming “unviable and unsustainable”. The impact has been particularly severe on international operations, where fuel prices have surged sharply, turning multiple routes loss-making.

Fuel now dominates airline cost structures

The surge in fuel prices has significantly altered airline cost dynamics. ATF now accounts for nearly 55–60% of total operational costs, compared to around 30–40% earlier.

The FIA also pointed to high refinery margins as a major factor keeping ATF prices elevated, even when global crude oil prices show signs of easing. This has limited the ability of airlines to benefit from softer oil trends.

Relief measures sought from the Centre

To address the crisis, the airlines have proposed several measures, including:

Temporary suspension of the 11% excise duty on ATF for domestic flights

Reduction in VAT rates across key aviation hubs

Reintroduction of a “crack band” pricing mechanism to stabilise fuel costs

The industry has argued that the current tax structure is intensifying financial pressure, as duties are linked directly to fuel prices.

Warning of wider impact on passengers and connectivity

The FIA has cautioned that continued fuel price volatility could lead to grounded aircraft, reduced flight frequencies, and possible cancellations.

Beyond airline finances, the ripple effects could impact passenger connectivity, lead to higher ticket prices, and disrupt overall schedule reliability.

The situation has been further influenced by global factors, including rising crude oil prices linked to geopolitical tensions, which have added to cost pressures across the aviation sector.

What lies ahead for the aviation sector

With costs rising sharply and margins under pressure, the airline industry has urged swift government action to prevent a deeper crisis.

The coming weeks will be crucial in determining whether policy relief can stabilise operations or if continued fuel price pressures push airlines towards further cutbacks, affecting both domestic and international travel networks.