ATF prices 2026: Urgent relief as fuel hits record

Why airlines are flagging an operational risk

India’s major airlines have asked the government for urgent relief as aviation turbine fuel (ATF) prices jump to record levels and squeeze already stressed balance sheets. In a letter to the Ministry of Civil Aviation, the Federation of Indian Airlines (FIA), representing Air India, IndiGo and SpiceJet, said immediate support is needed to maintain normal operations, according to a CNBC-TV18 report. The FIA warned that unpredictable fuel pricing is making it difficult to sustain both domestic and international flying, and that the pressure could translate into higher fares and route rationalisation.

The trigger is a sharp rise in jet fuel prices linked to the ongoing West Asia conflict and its impact on global oil markets. Alongside the cost shock, carriers have also pointed to operational complications such as route disruptions and longer flying times on certain sectors, which raise fuel burn and costs. The sector’s dependence on fuel makes it especially sensitive to sudden revisions in ATF rates.

ATF crosses ₹2 lakh per kilolitre for the first time

Earlier this month, ATF prices surged to an all-time high of over ₹2 lakh per kilolitre for certain categories, driven by rising global oil prices. Rates in Delhi touched ₹207,341.22 per kilolitre for certain segments, nearly double the previous month’s ₹96,638.14. This breach of the ₹2 lakh threshold marked a new peak beyond levels seen during the 2022 energy shock after the Russia-Ukraine conflict, when ATF was around ₹1.1 lakh per kilolitre.

Reports also noted a sharp divergence across user categories. For domestic scheduled airlines, prices rose 8.5% in one revision, while non-scheduled, charter and ad-hoc operators saw rates more than double. In one cited revision, ATF prices for certain segments jumped 114.5%.

Dual impact: scheduled airlines cushioned, others hit hard

The steepest hike was reported to apply primarily to non-scheduled operators such as private jets, charters and ad-hoc flights. Indian Oil Corporation was cited as saying these categories bore the brunt of the increase, with costs rising up to 115% for domestic operations and over 100% for international routes. For these operators, the price exceeded $1,000 per kilolitre for the first time in India.

Scheduled commercial airlines, which account for most passenger traffic, were described as being largely shielded through a calibrated intervention. The Ministry of Petroleum and Natural Gas said that while international benchmarks warranted a rise of more than 100%, public sector oil companies, in consultation with the Ministry of Civil Aviation, implemented only a 25% increase for domestic carriers, roughly ₹15 per litre. The remaining cost was deferred or shifted, according to the report.

International routes face sharper stress

The FIA said international operations have been hit harder, with overseas ATF prices rising by ₹73-₹75 per litre. It said this has weakened profitability on many international routes, with some becoming unviable. The industry body also flagged competitive pressure from foreign airlines refuelling in lower-cost jurisdictions, which can distort pricing power for Indian carriers on overlapping routes.

As a result, airlines have been forced to reassess route networks and operational strategies. Separate reports on the broader disruption environment also indicated that rerouting around conflict zones can add 35 to 70 minutes of flying time and increase fuel burn by 1.3 to 1.9 tonnes per sector, further compounding costs.

Fuel now takes up a bigger share of operating costs

A key concern for carriers is the rising share of fuel in total expenses. According to the FIA, ATF now accounts for nearly 55-60% of airline operating costs, compared with an earlier 30-40% range. Another report described ATF as 40-45% of operating costs in India, among the highest globally. The direction of travel is clear in both cases: fuel has become the dominant cost line.

The FIA also pointed to elevated refinery margins, or crack spreads, as an additional reason jet fuel prices remain high even when crude oil softens. That dynamic reduces the benefit airlines typically expect when global crude prices ease.

What the FIA has asked the government to do

The airlines’ industry body has sought targeted tax and pricing interventions to ease immediate pressure. As per the CNBC-TV18 report, the FIA urged the government to temporarily suspend the 11% excise duty on domestic ATF, reintroduce a “crack band” pricing mechanism to stabilise prices, and reduce VAT rates at major aviation hubs.

Carriers and industry watchers have also pointed to recent passenger-facing changes. With fare caps lifted last month, airlines had begun revising fuel surcharges in March, with some reports citing adjustments in the range of ₹150 to $100.

Government steps and official comments

Civil Aviation Minister Ram Mohan Naidu Kinjarapu described the partial and staggered increase in ATF prices as a “calibrated response to an extraordinary global crisis,” saying it would help stabilise airfares, maintain connectivity, and ensure uninterrupted cargo movement. Industry statements welcomed the move as near-term support during extreme volatility.

SpiceJet Chairman and Managing Director Ajay Singh said the partial increase came as a significant relief and thanked the Civil Aviation Minister and the Civil Aviation Secretary for intervening to secure a moderated adjustment. IndiGo also said the geopolitical situation has tightened global supply and pushed prices up, and thanked the government for insulating domestic air travel costs by passing on only a partial, staggered increase of 25%, adding it would review the impact on operating costs and announce revised fuel charges.

Updated ATF standards and the long-term fuel transition

Amid the pricing shock, the government updated ATF regulations to permit blending with synthesised hydrocarbons under revised fuel standards. The notification by the Ministry of Petroleum and Natural Gas is aimed at supporting sustainable aviation fuel (SAF) development and cleaner long-term alternatives. Airlines, however, have maintained that immediate pricing relief is critical to prevent operational instability, rising fares, and reduced connectivity.

Key figures at a glance

Market impact for airlines and flyers

The immediate risk for airlines is that sustained high ATF prices could force route rationalisation, frequency cuts, or higher surcharges, especially on longer sectors where fuel is a larger part of trip cost. For passengers, the policy choice to moderate the domestic increase is intended to cushion airfares, but airlines have indicated they will still reassess pricing and network plans as costs move.

The impact is uneven across the ecosystem. Non-scheduled operators and international carriers refuelling in India face a sharper price shock, while scheduled domestic carriers have received partial insulation through the revised pass-through mechanism. This dual pricing approach reflects a policy focus on mass passenger connectivity, while leaving premium and discretionary flying more exposed.

Why the episode matters

The latest ATF move shows how quickly geopolitical disruptions can transmit into India’s aviation cost base. It also underscores structural issues that the FIA has raised repeatedly, including state VAT differences, the sensitivity of airline viability to fuel taxes, and the role of crack spreads in keeping jet fuel elevated even when crude prices are not rising at the same pace.

At a sector level, the situation combines immediate price volatility with longer-term policy discussions on fuel standards and SAF readiness. The revised ATF blending norms may support cleaner alternatives over time, but they do not address near-term cash flow stress created by sharp price revisions.

Conclusion

Indian airlines are seeking urgent government support after ATF prices crossed ₹2 lakh per kilolitre and fuel’s share of operating costs climbed sharply. The Centre’s decision to stagger the domestic pass-through has provided partial relief, while airlines continue to press for tax and pricing reforms. The next steps to watch include any follow-up meetings with ministries, possible decisions on excise and VAT changes, and further revisions to fuel surcharges and route networks.

First published: Apr 28, 2026, 2:07 PM IST