Aviation turbine fuel rise contained, airlines respond with measured moves

Bengaluru: Airlines in India have begun passing on the impact of rising aviation turbine fuel (ATF) prices to passengers, though fare hikes are expected to remain limited for now as government intervention limits the increase for domestic carriers and delays a sharper pass-through to airfares. While most airlines are yet to take a formal call on raising ticket prices, some carriers, including IndiGo, have indicated adjustments in fuel-related charges in response to higher operating costs.

ATF prices surged sharply on Wednesday, with rates for non-scheduled, ad hoc and charter operations crossing Rs 2.07 lakh per kilolitre (kl), a steep jump from Rs 96,638.14 last month. To shield the domestic aviation market from global crude volatility, the Centre limited the increase for scheduled airlines at 25 per cent. As a result, domestic carriers are seeing a more moderate rise of about 8.6 per cent.

Airlines have broadly welcomed the move and indicated that fares may not be raised immediately, though some upward pressure is expected over time. IndiGo’s move to adjust fuel-related charges reflects an early response by carriers to rising costs, while others continue to assess the evolving pricing environment before making similar adjustments. The partial pass-through means domestic operators are paying significantly less than non-scheduled, ad hoc and charter players, who face the full impact of global pricing.

Across metros, ATF prices have risen moderately for domestic airlines. In Delhi, rates increased to Rs 1,04,927 per kl from Rs 96,638.14 in March. Kolkata saw prices rise to Rs 1,09,450 from Rs 99,587.14 per kl, Mumbai to Rs 98,247 from Rs 90,451.87 per kl, and Chennai to Rs 1,09,873 from Rs 1,00,280.49 per kl.

Industry stakeholders say the government’s intervention has provided crucial relief at a time of heightened global uncertainty. “The government’s decision to allow only a partial increase in ATF prices comes as a significant relief for the Indian aviation industry at a time of unprecedented global uncertainty. The timely intervention will go a long way in helping airlines navigate one of the most challenging global crises marked by volatility in fuel markets,” said Ajay Singh, Chairman and Managing Director, SpiceJet.

Air India described the move as a thoughtful and timely step, while a spokesperson for Akasa Air said such measures help create a stable operating environment and keep travel more affordable.

The surge is being driven by global disruptions, including the prolonged closure of the Strait of Hormuz and instability in West Asia, which have tightened crude supplies and raised input costs for airlines worldwide. While domestic carriers have been partly shielded, international operations are likely to face sharper cost pressures over time, industry sources said.

Experts caution that fuel price increases do not translate directly into airfare hikes. “ATF price increases don’t translate one-to-one into airfare hikes, but they raise the baseline cost of flying,” said an expert on the condition of anonymity.

Fuel accounts for nearly 35-40 per cent of an airline’s operating costs, making even moderate increases significant. “ATF prices have witnessed a noticeable increase in recent months, broadly in the range of 8-12%,” said Ravi Gosain, President, Indian Association of Tour Operators (IATO).

Airlines are responding with calibrated strategies, including adjusting capacity and focusing on high-demand routes. Rajiv Mehra, General Secretary, Federation of Associations in Indian Tourism and Hospitality (FAITH), said carriers may reschedule flights or reduce frequencies on low-traffic routes if pressures persist.

Travel trends are also shifting. Booking platforms are seeing a gradual rise in fares and earlier bookings as passengers try to lock in lower prices. While business travel remains stable, discretionary travel is showing signs of moderation amid rising costs.