Indian Airlines Warn of Imminent Shutdown Over Soaring Fuel Costs
New Delhi, Wednesday, 29 April 2026.
Skyrocketing jet fuel prices now consume 60% of operating budgets, pushing major Indian airlines to warn of an imminent shutdown without urgent government tax relief and pricing intervention.
A Disproportionate Financial Burden
The financial mathematics for these airlines have rapidly deteriorated in the wake of the Middle East crisis. Historically, ATF accounted for about 30 to 40 percent of an Indian airline’s operating costs [1][2][3]. However, following recent price surges, that share has ballooned to between 55 and 60 percent [2][3]. This spike is driven by benchmark Brent crude prices escalating from $72 per barrel to $118 per barrel [3]. Consequently, the ATF price—calculated as the Mean of Platts Arab Gulf (MOPAG) plus premium—skyrocketed from $87.24 per barrel to a peak of $260.24 per barrel, representing a staggering 198.304 percent increase, before settling at $235.63 per barrel by late April 2026 [3].
The Call for Structural Pricing Reform
To navigate this precarious landscape, the FIA is urging the government to reinstate a “crack band”—a pricing mechanism used previously to prevent extreme divergences between crude oil and refined ATF prices [1][3]. Between 2022 and late 2024, a crack band of $12 to $22 per barrel was maintained [3]. Without it, the current crack differential has surged to $132.59 per barrel, vastly inflating airline expenses [3][4]. The industry body emphasizes that while retail fuels like petrol and diesel have price-control mechanisms, ATF remains fully exposed to market volatility [2][3]. This is particularly frustrating for carriers given that ATF accounts for merely 4 percent of India’s total refinery production, of which domestic airlines consume only 30 percent, while 50 percent is exported [2][3].
Looming Deadlines and Economic Fallout
The urgency of this appeal is tied to the upcoming monthly ATF price revision scheduled for early May 2026 [alert! ‘The exact outcome of the May 2026 price revision remains unknown as government deliberations are ongoing’] [2][3]. The FIA has made it clear that without immediate and meaningful financial support, the sector faces insurmountable losses [1][2][3]. Additional operational expenses stemming from airspace closures, such as the ban over Pakistan, have left carriers with little to no financial buffer [2][3].