Indian airlines seek fuel pricing and charge relief amid West Asia conflict
The Federation of Indian Airlines has asked the government for a cost‑plus model for aviation turbine fuel, continuation of a reduced VAT rate, and a 25% cut in domestic landing and parking fees as fuel costs rise sharply.
Fuel pricing model
The Federation of Indian Airlines, representing Air India, IndiGo and SpiceJet, has written to the civil aviation ministry requesting that the pricing of aviation turbine fuel for domestic operations be shifted from an international benchmark‑based system to a cost‑plus model.
The group also seeks to replace the current 11% ad valorem excise duty on aviation turbine fuel with a fixed‑rate structure.
VAT and tax relief
The federation asked that the 7% value‑added tax rate on aviation turbine fuel in Delhi and Maharashtra be continued beyond mid‑November.
It also requested an extension of the 25% reduction in landing and parking charges for domestic flights until the West Asia crisis settles, noting that the earlier relief expired on 7 July 2026.
Fuel cost surge
Airlines report that the fuel component of operating costs has risen from around 30‑40% to about 55‑60% under current conditions.
Brent crude prices increased from $72 per barrel to $118 per barrel during the West Asia conflict, while aviation turbine fuel prices peaked at $260.24 per barrel before falling to around $175.33 per barrel.
The crack spread widened to roughly $60‑61 per barrel from a previous average of $8‑12.
Government ATF fund review
Ram Mohan Naidu said the government is revisiting the ₹10,000‑crore aviation turbine fuel price‑stabilisation fund after the original scheme attracted no airline applications within two months of launch.
The ministry is in talks with airlines and oil marketing companies about the fund, which had set a price of ₹115 per litre under the scheme compared with ₹137 per litre in October.
ECLGS 5.0 funding request
The federation urged the Ministry of Civil Aviation to expedite the release of pending amounts under the Emergency Credit Line Guarantee Scheme 5.0, noting that delayed disbursements are affecting airlines’ ability to meet operational and working‑capital needs.
It highlighted that higher aviation turbine fuel prices, airspace restrictions, flight diversions, and rupee depreciation are straining the industry’s liquidity.
Analysed 6 reports from 6 sources
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