Air India, IndiGo and SpiceJet seek postponement of ATF price increase

India’s leading airlines, including Air India, IndiGo and SpiceJet, have asked state-owned oil companies to postpone a proposed rise in aviation turbine fuel prices for domestic flights amid escalating energy market disruptions linked to the Middle East conflict.

According to a report by Bloomberg, cited by Oilprice.com, Indian carriers are seeking relief from rising fuel costs as the ongoing Iran-related crisis continues to disrupt global crude supply chains and increase operating expenses across the aviation industry.

The report said a decision on domestic jet fuel pricing is expected by June 1, with state-run oil marketing companies considering a potential increase of around 25%.

Airlines push for temporary relief on fuel costs

India’s oil marketing companies have already raised aviation fuel prices for international flights, with rates reportedly more than doubling compared to levels before the Iran conflict began.

However, domestic aviation fuel prices have not yet been revised upward.

According to Bloomberg’s sources, airlines requested that any increase for domestic operations be deferred until the regional crisis stabilises.

The carriers are attempting to limit further financial pressure at a time when fuel expenses have surged sharply across international operations.

Key concerns raised by airlines include:

• Rising global crude oil prices linked to Middle East instability
• Higher jet fuel procurement costs for international routes
• Pressure on operating margins across domestic aviation
• Increased exposure to foreign exchange volatility
• Elevated energy costs affecting the wider travel sector

Industry executives have also reportedly sought preferential tax treatment, arguing that fuel accounts for nearly 40% of airline operating costs.

Middle East conflict disrupts India’s energy flows

The pressure on airlines comes as India faces broader energy supply challenges following disruptions linked to the Strait of Hormuz, a critical global oil transit route.

According to Oilprice.com, the Middle East conflict has affected more than 40% of India’s crude oil flows that previously moved through the corridor.

The disruption has had wider economic consequences, including:

• A rising national oil import bill
• Pressure on the Indian rupee against the US dollar
• Investor outflows from capital markets
• Increased stress on liquefied petroleum gas supply chains

The Indian government has already urged citizens to reduce fuel consumption by limiting unnecessary travel, increasing public transport usage and encouraging carpooling measures.

India’s oil minister has said the country currently holds crude oil reserves sufficient for 69 days and liquefied petroleum gas supply for 45 days.

Fuel pricing pressure spreads across sectors

The aviation industry’s request for relief comes shortly after state-run fuel retailers increased road transport fuel prices for the second time within a week.

The latest adjustments followed more than two months without retail fuel hikes after the conflict in Iran began affecting energy markets.

The proposed increase in aviation turbine fuel prices could have major implications for domestic carriers already navigating intense competition, fluctuating demand and cost pressures across maintenance, leasing and currency-linked expenses.

Aviation turbine fuel remains one of the largest cost components for airlines globally, particularly in price-sensitive markets such as India where domestic air travel demand has expanded rapidly over recent years.

Airlines monitor next government and OMC decision

The final decision from oil marketing companies is expected in the coming weeks as discussions continue between airlines, refiners and policymakers.

Any delay in the proposed increase could offer temporary operational relief for airlines ahead of the peak travel season. However, continued volatility in global oil markets may keep pressure on carriers and fuel retailers alike if the Middle East crisis persists.

For India’s aviation industry, the outcome will be closely watched as airlines attempt to balance affordability, profitability and operational stability in an increasingly uncertain energy environment.