The Federation of Indian Airlines (FIA), representing major domestic carriers like Air India, IndiGo, and SpiceJet, has formally requested the Civil Aviation Minister, Kinjarapu Rammohan Naidu, for urgent financial relief. In a letter dated September 25, 2026, the industry body highlighted the significant financial strain on airlines stemming from the continuing West Asia conflict, which began in April 2026.
Key issues cited by the FIA include prolonged airspace restrictions, leading to longer flight routes and increased fuel consumption. This, coupled with a sharp rise in aviation turbine fuel (ATF) prices and the depreciation of the Indian Rupee against the US Dollar, has pushed operating costs dramatically higher.
Rising Costs and Operational Challenges
- Fuel Price Surge: Fuel, historically accounting for 30-40% of airline operating costs, has now escalated to 55-60%. The FIA noted that Brent crude prices increased from $72 to $118 per barrel, while ATF prices peaked at $260.24 per barrel, currently standing at $175.33 per barrel. The crack spread has also widened significantly.
- Airspace Restrictions: Diversions and longer routes due to airspace curbs have not only increased fuel burn but also inflated crew costs and reduced aircraft utilization.
- Rupee Depreciation: Key expenses such as aircraft leases, maintenance, and insurance are predominantly dollar-denominated, making them more expensive as the Rupee weakens.
Specific Demands for Government Support
To mitigate these pressures, the FIA has put forth several proposals:
- Extension of Landing and Parking Charge Relief: The federation is seeking an extension of the 25% reduction in landing and parking charges for domestic flights, a relief that expired on July 7, 2026, under an Airports Economic Regulatory Authority (AERA) order.
- ATF Pricing Model Shift: The FIA requested a transition from an international benchmark pricing model for domestic ATF to a “cost-plus model” to stabilize fuel costs.
- Excise Duty Rationalization: A call was made to rationalize the 11% excise duty on ATF, moving from an ad valorem levy to a fixed-rate structure, arguing that higher fuel prices disproportionately increase excise and VAT burdens.
- VAT Relief: The industry body urged the continuation of 7% VAT relief in Delhi and Maharashtra beyond mid-November 2026 and requested similar cuts in states like Tamil Nadu, West Bengal, Karnataka, and Telangana.
The FIA emphasized that timely government intervention is crucial to safeguard airline finances, maintain connectivity, and prevent a scenario where carriers are forced to withdraw from commercially unsustainable routes.