The Federation of Indian Airlines has warned the entire Indian airline industry is on the brink of collapse due to soaring jet fuel prices driven by the US-Iran war
Jet fuel prices have soared due to the Iran war (stock)(Image: Witthaya Prasongsin via Getty Images)
The Federation of Indian Airlines (FIA) says the aviation industry in India is “on the verge of closing down”.
The FIA has appealed for support from the Ministry of Civil Aviation, claiming that jet fuel costs are placing severe pressure on the sector. The FIA, which represents major domestic carriers including IndiGo, SpiceJet and Air India, said this pressure has pushed the airline sector close to collapse.
The FIA noted that, owing to the rise in the cost of jet fuel by Rs.73 (£0.60) per litre for both international and domestic services, operations have become “completely unviable”. This cost increase has led to “significant losses for the aviation sector in April 2026”, the FIA said.
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It said: “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 [Aviation Turbine Fuel].” The April 2026 pricing results “do not ensure parity between domestic and international operations”, the airline organisation added.
The updated charges for aviation fuel come following the oil and gas supply emergency triggered by the US and Israel’s conflict with Iran. The continuing hostilities have resulted in a blockade of the Strait of Hormuz, a critical route for approximately 20 per cent of the world’s supply.
The conflict has sent the price of Brent Crude soaring from $72 per barrel (£58) to $118 per barrel (£96). As a result, the ATF price (MOPAG and Premium) has rocketed from $87.24 (£70) to a peak of $260.24 (£211) per barrel – a 295% jump – and is presently trading at $235.63 (£190) per barrel. This represents a substantial increase compared to March 2025 pricing, the FIA added.
The FIA said ATF pricing typically accounts for around 30 to 40 per cent of an airline’s costs. However, with prices climbing due to the US-Iran conflict, the surge in ATF costs has now driven airline operating expenses to 55 to 60 per cent, reports the Express.
“Add to this, the Rupee has also depreciated further to its lowest level, adding additional burden on Airlines in terms of ATF Pricing,” the FIA noted.
In response to the unfolding crisis, the FIA has put forward three crucial recommendations to the government. These include restoring the crack band in accordance with a pre-agreed formula, which refers to the margins refineries earn when converting crude oil into finished products. They also urged a temporary suspension of the excise duty on ATF, which currently stands at 11 per cent for domestic operations.
Finally, the FIA is calling for a reduction in VAT for major states like Delhi and Tamil Nadu, highlighting that cities such as Mumbai, Bangalore, Hyderabad, and Kolkata – accounting for over 50 per cent of airline operations in India – currently face VAT rates ranging from 16 to 20 per cent.
“Applying the same framework consistently will ensure parity, reduce the financial burden and enable Indian airlines to compete more effectively with global counterparts,” it said.
