The Federation of Indian Airlines (FIA) has raised concerns about the aviation sector in India facing imminent shutdown due to the escalating jet fuel costs. FIA, representing major domestic carriers like IndiGo, SpiceJet, and Air India, has highlighted the critical situation caused by the substantial surge in fuel prices.

The recent spike in jet fuel prices by Rs.73 (£0.60) per liter for both international and domestic flights has rendered operations financially unsustainable, leading to significant losses in the aviation industry in April 2026, as reported by FIA.

The aviation industry in India is under immense pressure and is at risk of closure or operational halt, exacerbated by the West Asia conflict and the sharp increase in Aviation Turbine Fuel (ATF) prices, according to FIA. The recent ATF price hikes are a result of the oil and gas supply crisis triggered by the US and Israel’s conflict with Iran, leading to a blockade of the critical Strait of Hormuz.

This conflict has caused Brent Crude prices to surge from $72 per barrel (£58) to $118 per barrel (£96), resulting in a drastic increase in ATF prices, which currently stand at $235.63 (£190) per barrel, significantly higher than prices in March 2025.

The FIA emphasized that ATF costs typically contribute 30 to 40 percent of an airline’s expenses, but with the recent surge, these costs now constitute 55 to 60 percent of operating expenses, impacting profitability significantly.

In response to this crisis, the FIA has proposed three key recommendations to the government, including restoring the crack band margins, temporary suspension of excise duty on ATF, and a reduction in VAT for major states like Delhi and Tamil Nadu to ease the financial burden on airlines and enhance their competitiveness globally.