Indian domestic air travel costs have seen a significant surge, with average airfares increasing by 20.5% in June 2026 compared to March 2025. The Ministry of Civil Aviation provided this clarification in Parliament, attributing the hike primarily to escalating Aviation Turbine Fuel (ATF) prices, geopolitical tensions in West Asia, and airline capacity reductions.
Rising Fuel Costs and Geopolitical Impact
Aviation Turbine Fuel (ATF) is a major operational expense for airlines, typically accounting for 35% to 40% of their total costs. The Ministry highlighted that ATF prices have soared by over 100% due to the ongoing West Asia conflict, significantly impacting airline operating budgets. Beyond fuel, other dynamic factors influencing airfares include international market ATF prices, foreign exchange rates, excise duties, Value Added Tax (VAT), and aircraft lease rentals.
In response to these heightened operational costs, domestic carriers have implemented flight reductions as part of their operational rationalisation strategies, further contributing to the upward pressure on ticket prices.
Government Measures for Affordability and Transparency
The government has introduced several proactive measures aimed at making air travel more affordable and enhancing transparency in fare structures:
- Legislative Action: The Protection of Interests in Aircraft Objects Act, 2025, was enacted to help lower interest rates and lease rentals for aircraft.
- Tax Rationalisation: Efforts are underway to rationalise Central Excise Duty and Goods and Services Tax (GST) on Maintenance, Repair, and Overhaul (MRO) components and contracts.
- VAT Reduction: The Ministry is actively requesting States and Union Territories to reduce the high VAT levied on ATF.
To ensure fairness and prevent arbitrary pricing, the Directorate General of Civil Aviation (DGCA) operates a Tariff Monitoring Unit (TMU). This unit regularly monitors airfares across 78 selected routes using airline websites on a monthly basis. The TMU's role is to ensure that airlines do not charge fares outside the range they have officially declared.
Additionally, for April and May 2026, ATF prices were capped at a maximum increase of 25% over the base price set on March 1, 2026, to provide some stability to the market.