India’s aviation sector faces serious pressure due to rising fuel costs. Moreover, the Federation of Indian Airlines wrote an urgent letter. Consequently, airlines requested immediate government intervention to handle the crisis.
Major Airlines Flag Financial Stress
Meanwhile, Air India, IndiGo, and SpiceJet expressed strong concerns. Moreover, they warned about possible flight cancellations. Therefore, they also indicated aircraft grounding risks if conditions worsen.
Fuel Prices Surge Sharply
Furthermore, Brent crude prices jumped from 72 dollars per barrel to 118 dollars. Consequently, ATF prices rose sharply from 87 dollars to over 260 dollars. Meanwhile, current levels remain near 235 dollars per barrel.
Crack Spread Hits Record High
Additionally, the gap between crude and ATF reached unprecedented levels. Previously, this spread stayed between 11 and 18 dollars. However, it has now surged to 132 dollars per barrel.
Airlines Question Pricing Impact
Moreover, FIA stated this spread reflects oil companies’ profits. Consequently, airlines questioned the fairness of such pricing. Meanwhile, international flights have become completely loss-making.
Costs Rise Across Operations
Furthermore, ATF usually accounts for 30 to 40 percent of airline costs. However, this share has now increased to 55 to 60 percent. Additionally, the weak rupee has intensified financial pressure.
Airlines Present Key Demands
Meanwhile, FIA placed three major demands before the government. Firstly, they requested restoring the crack band mechanism introduced in October 2022. However, this system ended in December 2024.
Tax Relief And VAT Reduction
Secondly, airlines asked for temporary removal or suspension of 11 percent excise duty. Thirdly, they demanded VAT reduction across major states. Consequently, these steps could ease operational costs.
High Taxes In Key Cities
Moreover, VAT on ATF remains high in major cities. Delhi charges 25 percent, while Tamil Nadu imposes 29 percent. Meanwhile, Mumbai, Bengaluru, Hyderabad, and Kolkata apply 16 to 20 percent rates.
What Lies Ahead
Finally, these six cities cover over half of airline operations nationwide. Therefore, policy decisions now hold critical importance. Meanwhile, airlines await government response to prevent deeper disruption.
