Indian airlines seek jet fuel hike delay before June 1

Why jet fuel pricing is back in focus

India’s major airlines have asked state-run oil refiners to postpone any increase in aviation turbine fuel (ATF) prices for domestic flights until the West Asia conflict eases, according to a Bloomberg report citing people familiar with the matter. The request comes as carriers face rising operating costs and network disruptions linked to the regional situation.

The discussions are significant because ATF is one of the largest cost lines for airlines, and domestic fuel prices in India are revised on a set monthly cycle. A decision on domestic ATF pricing is expected before June 1, the report said.

What airlines have asked refiners to do

The proposal was floated by airlines including Air India Ltd., IndiGo and SpiceJet Ltd., the report said. Their central request is to hold off on hiking domestic jet fuel prices until the conflict-driven pressure on oil markets and operations eases.

The airlines’ plea is framed as a measure to ease cost pressures and limit losses at a time when the sector is already under strain. Separately, the industry has warned that flights could be suspended if fuel prices are not controlled.

What state-run refiners are considering for June

State-owned refiners and fuel retailers, including Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp., are discussing whether to raise jet fuel prices for domestic flights in June by up to 25%, the report said.

The same report also said refiners are selling jet fuel for domestic flights at a loss of around ₹92,000 per kiloliter, highlighting the competing pressures on oil companies and airlines. Any change for June would typically be implemented on the first day of the month, in line with the established revision cycle.

Government involvement and the June 1 decision window

India’s Ministry of Petroleum and Natural Gas is involved in the discussions and may intervene again, mirroring its actions in April and May, according to the Bloomberg report. A decision is expected before June 1.

ATF pricing in India has been deregulated for years, but the government stepped in during April after global oil prices surged. The government limited the most recent domestic jet fuel price hike to 25% and required oil majors to keep prices constant in May.

Domestic ATF versus international ATF: two different regimes

The ongoing talks and potential limits are focused only on domestic flights. The report noted that jet fuel for international routes is deregulated and has already seen sharp increases.

International jet fuel prices more than doubled in April and reached $1,511.86 per kiloliter by May, according to the figures cited. This split between domestic controls and international market-linked pricing has become a key part of the debate as airlines manage overall network economics.

Financial strain on airlines and operational pressures

Airlines are making the request amid deep financial stress, with fuel costs rising and airspace disruptions adding complexity. The Bloomberg report also flagged that higher fares and a weaker rupee are affecting demand and costs for the sector.

In a separate escalation earlier in the year, the Federation of Indian Airlines (FIA), representing carriers including IndiGo, Air India and SpiceJet, warned the Civil Aviation Ministry that the industry was under extreme stress and could suspend services unless jet fuel prices were lowered. The FIA sought a return to pandemic-era cost caps on ATF and also asked for a reduction or deferment in taxes.

State-level tax relief: Delhi and Maharashtra cut VAT

Some relief has come through state taxes. Delhi cut VAT on ATF from 25% to 7% after Maharashtra made a similar move, according to the report. The stated intent was to ease pressure on airlines and passengers as global jet fuel prices climbed.

The Ministry of Civil Aviation had reportedly urged states including Maharashtra, Delhi, Tamil Nadu and West Bengal to reduce VAT on jet fuel, citing that these states imposed some of the highest taxes on ATF in the country.

Key facts at a glance

How the situation unfolded: timeline markers

Market impact and why investors are watching

For listed aviation companies, a renewed jump in domestic ATF would directly raise cost pressures in a business where pricing power can be constrained by demand conditions and competition. The report’s reference to higher fares and a weaker rupee underscores that airline economics are being pulled in multiple directions at once.

For oil marketing companies, the reported domestic selling loss of around ₹92,000 per kiloliter points to the trade-off between absorbing losses and passing costs through. The government’s prior intervention in April and May, and its potential role again before June 1, is a key variable because it can change the timing and size of price revisions.

What to watch next

The immediate trigger is the expected decision before June 1 on domestic ATF prices for June. Market participants will also track whether the oil ministry intervenes again and whether refiners proceed with, reduce, or defer the discussed hike of up to 25%.

Separately, the widening gap between domestic measures and international deregulated pricing, along with state-level VAT cuts, will remain important in assessing how quickly cost pressures can be eased across routes and hubs.