India's airlines are sounding the alarm, and this time, they're not mincing words. Industry leaders have warned that if aviation turbine fuel (ATF) costs continue rising unchecked, some carriers may be forced to "stop operations altogether" due to the ATF price hike in India.
That's not a dramatic headline. That's the actual language coming out of boardrooms right now.
So what exactly is going on, and should you be worried about the price of your next flight? Let's break it down.
What is ATF, And Why Does It Matter So Much?
Aviation turbine fuel is essentially the jet fuel that powers every commercial aircraft.
Unlike petrol for your car, airlines can't just switch suppliers or cut consumption without cancelling flights.
Fuel is non-negotiable, and for Indian carriers, it typically accounts for anywhere between 35% to 50% of their total operating costs.
And here's the kicker: ATF in India is not under GST.
Airlines pay central excise duty plus state VAT on every litre, with no input tax credit. When prices go up, airlines eat the full cost.
How Bad is The Surge?
The numbers tell a stark story. ATF prices in India have seen sharp upward revisions in 2025, tracking global crude oil volatility while being further inflated by domestic levies.
At several major airports, jet fuel costs have risen by double-digit percentages compared to the same period last year.
ATF share of costs: 35–50% of total airline operating expenses
Tax structure (Outside GST): No input credit available to carriers
For airlines already operating on razor-thin margins, a reality for much of India's aviation sector, this isn't a bump in the road. It's a wall.
What are Airlines Demanding From The Government?
The aviation industry has taken its case directly to policymakers, calling for urgent government relief on ATF.
The demands are specific:
Bring ATF under GST. This is the biggest ask. A rationalised GST rate would let airlines claim input credits, saving thousands of crores annually. Every major aviation body has pushed for this since 2017.
Cut excise duty and fix state VAT. Right now, states charge anywhere from 1% to 30% VAT on ATF. Airlines want a uniform, lower rate. A few states have acted. Most haven't.
Subsidise regional routes. On Tier-2 and Tier-3 routes, thin passenger loads make high fuel costs completely unworkable. Direct support is needed.
What Does This Mean for You, The Traveller?
Here's where it gets personal. If the airline fuel cost crisis in India isn't resolved, you'll feel it.
First: Fares
Flight ticket prices in India are likely to rise. Airlines will pass on costs through higher base fares or fuel surcharges. No carrier can absorb this indefinitely.
Second: Routes
Airlines may quietly drop less profitable connections, especially to smaller cities. For millions of Indians, that's not just inconvenient. It's a loss of economic access.
Third: Jobs
Ground staff, cabin crew, maintenance workers. A distressed aviation sector puts hundreds of thousands of livelihoods at risk.
So What's The Government Likely to Do?
The push to bring ATF under GST in India isn't new. It's been on the table since GST launched in 2017.
The problem? States don't want to give up the revenue they earn from ATF taxes. It's a tough sell inside the GST Council.
That said, the tone from the Ministry of Civil Aviation has been more sympathetic in recent months, with officials acknowledging the sector's "genuine distress." Whether that translates into action, especially ahead of a policy cycle, remains to be seen.
Whether that turns into action remains to be seen.
Airlines aren't asking for a handout. They want a level playing field that most countries already give their aviation sectors.
The window for intervention is narrow. And if nothing changes, it's passengers and workers who will pay the price.
And this isn't just an airline problem. India's fuel pricing has its own story, one worth reading.