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The Indian airline sector is pressing the government for immediate intervention due to a sudden spike in jet fuel prices, which is straining their operations and increasing costs. In a letter addressed to the Ministry of Civil Aviation, the Federation of Indian Airlines (FIA), representing carriers like Air India, IndiGo, and SpiceJet, has raised alarms about the soaring costs of Aviation Turbine Fuel (ATF), stating that the industry is under "extreme stress." The organization highlighted that the current cost environment is rendering many routes economically unviable, and if prices remain high, airlines may have to reconsider their operations.

The primary concern stems from the rapid increase in ATF prices. Recent developments, particularly tensions in West Asia, have led to a surge in global crude oil prices, pushing ATF costs beyond ₹2 lakh per kiloliter. According to industry sources, aviation fuel, which typically accounts for about 30-40% of airline expenses, has now escalated to 55-60% of operating costs. This shift has significantly squeezed profit margins. In their correspondence, the FIA noted that airlines are struggling to absorb these increases, especially on international routes where fuel costs are higher and price adjustments are limited.

Airlines have also warned that persistently high fuel prices are putting pressure on cash flow, exacerbating financial strain across the sector. The industry body has called for immediate and structural measures. As an urgent step, they have strongly urged the government to temporarily remove the 11% excise duty on ATF and reduce the VAT imposed at the state level, which can reach as high as 25% in some regions. On a structural level, airlines are advocating for a more predictable pricing mechanism for jet fuel. They argue that fluctuations in refining margins, or 'crack spreads,' have kept ATF prices elevated despite a decline in crude oil prices. This disparity between crude oil and jet fuel prices has become a significant concern.