India’s aviation sector has raised urgent concerns over rising aviation turbine fuel (ATF) prices, warning that the industry is approaching a critical financial crisis that could force airlines to suspend operations. The warning comes amid heightened global tensions in the Middle East, which have disrupted crude oil supply routes and pushed fuel prices higher.

The Federation of Indian Airlines (FIA), which represents major carriers including Air India, IndiGo, and SpiceJet, has written to the Civil Aviation Ministry seeking urgent intervention. In its letter, the federation warned that continued price volatility or uneven pricing between domestic and international routes could lead to severe losses and even aircraft grounding, forcing flight cancellations.

The industry body said ATF currently accounts for nearly 40% of an airline’s total operating cost, making it the single largest expense component. It added that long-haul international operations are being hit the hardest due to higher fuel pricing in overseas segments. Airlines stressed that without immediate financial relief or policy adjustments, sustaining operations could become increasingly difficult.

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To address the crisis, airlines have urged the government to adopt a uniform pricing mechanism for ATF across domestic and international operations. They have suggested reintroducing a “crack band” system, which limits extreme differences between crude oil prices and refined aviation fuel costs. The FIA said such a system was previously used to stabilise pricing and could help prevent further financial stress on carriers.

Airlines have also requested a temporary deferment of the 11% excise duty on ATF. They argued that rising global oil prices combined with rupee depreciation have already significantly increased fuel costs, and additional tax burdens are further worsening the situation. The federation said immediate relief is necessary to ensure operational continuity.

Industry concerns have been amplified by geopolitical disruptions, including tensions involving oil transport routes such as the Strait of Hormuz, through which a significant share of global crude shipments pass. Any disruption in this corridor, experts note, can have a direct impact on global fuel prices. The aviation industry has warned that without swift policy intervention, rising costs could threaten flight operations and passenger connectivity across domestic and international routes.

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