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Air India has announced a phased introduction of fuel surcharges on several domestic and international routes, citing a sharp rise in aviation turbine fuel (ATF) prices linked to supply disruptions triggered by the ongoing conflict in West Asia.

The airline said the surcharge will apply to new ticket bookings starting March 12 and will be rolled out in stages across different route networks, reported Moneycontrol.

The decision comes at a time when global energy markets are experiencing heightened volatility following escalating tensions in the Gulf region, which has disrupted supply chains and pushed oil prices higher.

Rising Fuel Costs Drive Airline Decision

In a statement, Air India said aviation turbine fuel prices have increased significantly since early March, putting pressure on operating costs across the aviation industry.

ATF typically accounts for nearly 40 per cent of an airline’s operating expenses, making fuel price fluctuations one of the most critical factors influencing profitability. The airline noted that the burden is further intensified in India due to the structure of fuel taxation.

High excise duties and value-added tax on ATF in major metro cities such as Delhi and Mumbai increase the overall cost of aviation fuel, adding to the operational challenges faced by airlines when global oil prices rise sharply.

The increase in fuel costs comes amid broader disruptions in global energy markets following the escalation of hostilities in West Asia. The conflict has raised concerns about supply disruptions from West Asia and potential risks to shipping routes through the Strait of Hormuz, one of the world’s most important oil transit corridors.

First Phase Begins March 12

Under the first phase of the surcharge revision, which applies to all new bookings made from March 12 onward, Air India will introduce a fuel surcharge of Rs 399 on domestic routes.

The surcharge will also apply to flights connecting India with neighbouring South Asian countries that are members of the South Asian Association for Regional Cooperation (SAARC), including Nepal, Sri Lanka and Bangladesh. These routes had previously not carried any fuel surcharge.

Air India will also introduce a surcharge of $10 on routes to West Asia, where passengers had earlier not been subject to any fuel surcharge.

For Southeast Asian destinations, the airline will increase the surcharge to $60 from the existing $40.

Flights to African destinations will see the surcharge increase to $90, up from $60 previously.

Second Phase Targets Long-Haul Routes

A second phase of the surcharge increase will apply to bookings made from March 18.

During this phase, Air India will raise surcharges on several long-haul routes. Flights to Europe will see the surcharge increase to $125 from $100.

Routes to North America and Australia will see surcharges rise to $200 from the current $150.

The airline said a third phase covering Far East markets, including Hong Kong, Japan and South Korea, will be announced at a later date.

Existing Tickets Exempt From Immediate Changes

Air India clarified that tickets issued before the implementation dates will not attract the revised surcharges unless passengers make changes to their travel dates or itineraries that require recalculation of fares.

The surcharge policy will apply across the Air India group, including flights operated by its low-cost subsidiary Air India Express.

Airline Says Move Is Necessary To Sustain Operations

The airline acknowledged that introducing additional charges may affect passengers but emphasised that the move has become necessary because of factors beyond its control.

"Air India regrets the need to increase fuel surcharges in this manner but emphasises that it is necessitated by factors outside its control," the airline said in its statement.

It added that without such adjustments, some flights may not be able to cover operating costs.

"Absent such fuel surcharges, it is likely that some flights would be unable to cover operating costs and would have to be cancelled," the airline said.

The airline added that it will continue to monitor fuel price trends and review the surcharge periodically, adjusting it depending on how the global energy situation evolves.

Aviation Sector Faces Pressure From Global Oil Volatility

The decision highlights the sensitivity of the aviation industry to fluctuations in global oil prices. Airlines typically face a narrow margin environment where sudden spikes in fuel costs can quickly erode profitability.

The latest move by Air India comes as global crude oil prices have surged amid geopolitical tensions in West Asia. Concerns over disruptions to energy flows through the Strait of Hormuz and supply constraints from major oil producers have pushed oil benchmarks above $100 per barrel in recent days.

With global energy markets expected to remain volatile in the near term, airlines may continue to adjust surcharges as they navigate the financial impact of rising fuel prices and supply uncertainties.