India’s airline industry is in a serious crisis as major carriers including Air India, IndiGo, and SpiceJet have warned the government that they are “on the verge of stopping operations.”
In an urgent SOS sent by the Federation of Indian Airlines (FIA) on April 26, 2026, carriers cited an unprecedented surge in Aviation Turbine Fuel (ATF) prices and escalating operational costs as the primary drivers of this financial emergency.
In the letter to the government, the FIA said the sector described the situation as critical, with some airlines at risk of stopping operations entirely.
“The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations. The dire condition of the aviation sector has been exacerbated by the West Asia war and the exorbitant increase in the price of ATF,” the letter stated.
The main concern is the sharp rise in Aviation Turbine Fuel prices, which now account for nearly 40% of airline operating costs. The recent conflict in West Asia has pushed global oil prices higher, while airspace restrictions have forced airlines to take longer international routes, increasing fuel burn and operational expenses.
Skyrocketing fuel prices
ATF prices, which typically account for 30–40% of expenses, have surged to 55–60% of total operational costs. According to the FIA, ATF prices for international operations increased by Rs73 per litre (about US$0.87 per liter) in April 2026, making both international and domestic operations financially unsustainable.
“The ATF pricing for international operations was increased by Rs73 per liter, making practically international operations along with domestic operations completely unviable and resulting in significant losses for the aviation sector in April 2026,” the federation said.
The FIA added that the April 2026 pricing structure failed to ensure parity between domestic and international operations, placing even more pressure on carriers already struggling with rising costs.
The Federation of Indian Airlines has urged the government to revise ATF pricing mechanisms, temporarily defer excise duties on jet fuel, and provide immediate financial support to prevent route cuts, cancellations, and further disruption.
At the same time, Indian aviation is dealing with additional challenges including aircraft groundings linked to engine shortages and supply-chain delays, pilot shortages, and a weaker rupee, which has increased leasing, maintenance, and foreign currency costs. The conflict in Iran is also forcing air carriers to longer routes due to airspace restrictions.
Industry analysts warn that if the government does not step in quickly, travelers could soon face higher airfares, reduced flight frequencies, and major disruptions across India’s domestic and international flight networks.
The Indian government announced meanwhile first urgent measures. Today, Civil Aviation Minister Ram Mohan Naidu announced a series of relief measures for domestic airlines, including a 25% reduction in landing and parking charges and capping the maximum increase in ATF to 25% as well. The Minister indicated to closely monitor developments and take further steps if needed.
