Stories
Indian Airlines Seek Urgent Relief Amid Soaring Costs From West Asia Conflict
- •The Federation of Indian Airlines representing major carriers has urged the government for financial relief due to surging fuel costs and longer flight routes caused by the West Asia conflict.
- •Airlines reported that fuel expenses have jumped from 30-40 percent to 55-60 percent of total operating costs, driven by a sharp rise in ATF prices and a weakening rupee.
- •The FIA requested a shift in domestic ATF pricing from an international benchmark to a cost-plus model and asked for the replacement of percentage-based excise duty with a fixed-rate duty.
- •The association is also seeking an extension of a 25 percent reduction in landing and parking charges for domestic flights until the crisis subsides.
- •IndiGo announced plans to increase fuel charges on both domestic and international flights following the mounting financial strain.
Key Questions Answered
The Federation of Indian Airlines (FIA) has urged the government to shift domestic aviation turbine fuel (ATF) pricing from the current international benchmark-based system to a cost-plus pricing model to address soaring costs caused by the West Asia conflict and abnormal crack differentials.
Airlines have asked the government to replace the 11 percent ad valorem excise duty on ATF with a fixed-rate duty to prevent tax burdens from compounding with higher fuel prices. Additionally, the FIA requested the continuation of the 7 percent VAT rate on ATF in Delhi and Maharashtra while seeking lower VAT rates in Tamil Nadu, West Bengal, Karnataka, and Telangana.
The conflict has forced carriers to use longer flight routes due to airspace restrictions, which increases fuel consumption and crew costs while reducing aircraft utilization. Consequently, fuel expenses have surged from 30-40 percent to about 55-60 percent of total operating costs, compounded by a weaker rupee and higher dollar-linked expenses like leases and maintenance.
