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Domestic airlines operating in India are required to pay ₹2 lakh for each kilolitre of aviation turbine fuel (ATF) as of the close of business on April 1, 2026. This represents the first time in history that ATF prices in India have exceeded ₹2 lakh per kiloliter. As reported by the Economic Times, the reason for this extraordinary increase in fuel prices is the conflict in West Asia.
The ongoing conflict between the US, Israel, and Iran has practically resulted in the blockade of the Strait of Hormuz, the main shipping route through which approximately 20% of the world's oil is transported. This resulted in ATF prices, which have been deregulated in India since 2001, being reset on April 1, 2026, to reflect an increase of more than 100%. The Government stepped in to avert catastrophe for the domestic airline sector by maintaining ATF prices at or close to their previous level for most of April 2026. The domestic airline sector has not recovered from the restructuring of ATF pricing initiated by the Government on April 1, 2006.
In a coordinated move announced the morning of April 1, the Ministry of Petroleum and Natural Gas, in consultation with the Ministry of Civil Aviation, directed public sector oil marketing companies (OMCs) to pass on only a partial and staggered increase of 25%. This translates to approximately ₹15 per litre, to domestic scheduled carriers, as confirmed by the Ministry of Petroleum and Natural Gas post on X (April 1, 2026) and reported by PTI. On the other hand, full market rate increases for non-registered operators, chartered, private, and international operators (separate from regular scheduled carriers) were implemented.
The new rates as of April 1, 2026, were as follows: New Delhi ₹1,04,927, Kolkata ₹1,09450, Mumbai ₹98,247, and ₹1,098732 Chennai, according to ANI and confirmed by the revised rate sheets provided by the Oil Marketing Companies. Additionally, the all-time benchmark for unregulated ATF was New Delhi at an unprecedented ₹20,7341/kilolitre - the first time an ATF price in India had exceeded ₹200,000, as reported by India TV News.
In India, ATF (a.k.a. Aviation Turbine Fuel) makes up 40–45% of total operating expenses for airlines. This is among the highest in the world, as stated by the Tribune India. After Russia invaded Ukraine in 2022, airlines paid their highest-ever rate per KL of unshielded fuel (₹1,00,000/KL) before the monumental increase in fuel cost (more than 100% since the previous highest rate) caused any significant increase in airline operating costs. Since airspace closure due to conflict in West Asia began on February 28, many airlines have been experiencing greatly increased fuel consumption on longer international routes (e.g., airline operators have increased their use of fuel before any increase in operating costs due to increased prices).
Most airlines had already been preparing for this fuel price increase. For example, in March of 2026, Air India had implemented domestic fuel surcharge rates of ₹399 per sector. IndiGo levied surcharges ranging from ₹425 to ₹2,300 depending on distance, as reported by NDTV Profit via Free Press Journal. For international routes, IndiGo's charges ranged from ₹900 for subcontinental sectors to ₹10,000 for Europe-bound flights.
Joint Secretary in the Civil Aviation Ministry, Asangba Chuba Ao, described the move as "extremely important relief" that could "halt an impending industry-wide crisis," according to ANI, during an inter-ministerial meeting on 1st April. He stated that the intervention would require airlines to change their pricing structure and remove the fuel surcharges that have already been imposed. In a separate statement, Sujata Sharma, Joint Secretary in the Petroleum Ministry, stated that the increase of ₹15/litre could be expected to amount to about ₹21/litre (including taxes and cesses) in final cost to the airline industry, as reported by The Print.
The dual pricing mechanism of domestic scheduled carriers being shielded, and international and non-scheduled operators exposed to full market rates, reflects a deliberate policy choice. Protect mass mobility and cargo continuity over premium and private aviation. Civil Aviation Minister Ram Mohan Naidu took to X to explain that, due to the Hormuz closure, there could be a large increase (over 100%) in fuel prices which would impact on operations starting 1st April; further declaring that the measured approach would ultimately be "beneficial for the overall economy as it ensures the smooth flow of goods and keeping essential air connectivity for trade and the logistic industry." as reported by ANI.
India's domestic airlines have been handed a relief but not a solution. The 25% partial hike translates to ₹21 per litre after taxes. The previous ATF record was ₹1.1 lakh per kl in 2022. This month's unshielded rate is ₹2.07 lakh per kl, nearly double that. ATF remains outside India's GST framework, meaning VAT disparities between states range from 0% to 29%, creating structural pricing inefficiencies that no single ministerial intervention can fix. The government has bought the industry time. However, April's partial relief could look very different by May 1 if the crisis holds. India's aviation sector has been shielded for now, but the question is for how long.
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