The Federation of Indian Airlines (FIA) has warned that the country's aviation industry is 'on the verge of closing down' due to soaring jet fuel costs linked to the conflict with Iran. Representing major carriers including IndiGo, SpiceJet and Air India, the FIA has appealed to the Ministry of Civil Aviation for urgent support.
Jet fuel prices have surged by Rs.73 per litre for both domestic and international services, making operations 'completely unviable', the FIA said. The cost of Aviation Turbine Fuel (ATF) has risen from $87.24 to a peak of $260.24 per barrel — a 295 per cent jump — and currently trades at $235.63. This has led to 'significant losses for the aviation sector in April 2026', the organisation added.
The FIA noted that ATF pricing typically accounts for 30 to 40 per cent of an airline's costs, but this has now climbed to 55 to 60 per cent. 'The dire condition of the Aviation Sector has been exacerbated by the West Asia War and the exorbitant increase in the price of ATF,' it said. A depreciating rupee has further added to the burden.
In response, the FIA has put forward three recommendations to the government: restoring the crack band according to a pre-agreed formula, temporarily suspending the 11 per cent excise duty on ATF for domestic operations, and reducing VAT in major states like Delhi and Tamil Nadu, where rates range 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,' the FIA said.
