ATF Price Rise: Soaring Aviation Turbine Fuel (ATF) prices have intensified pressure on Air India, IndiGo, and SpiceJet, prompting the FIA ​​to seek relief from the government. If relief is not granted, there is a risk of flight cancellations and the grounding of aircraft.

ATF Price Rise: The Federation of Indian Airlines (FIA) has written an urgent letter to the Ministry of Civil Aviation. In this letter, representing Air India, IndiGo, and SpiceJet, the federation has appealed to the government for immediate assistance. The airlines warn that if no relief is provided regarding the prices of Aviation Turbine Fuel (ATF), the situation could escalate to the point where flights must be cancelled and aircraft grounded.

The letter highlights that, due to the conflict in West Asia, Brent crude oil prices surged from $72 per barrel to reach $118 per barrel. This had a direct impact on ATF prices, which skyrocketed from $87 per barrel to cross the $260 mark—representing a jump of approximately 295 percent. Currently, the price hovers around $235 per barrel.

International Flights Now Operating at a Complete Loss

Furthermore, the "crack spread"—the price differential between crude oil and ATF—has reached a record high. Previously, this spread typically ranged between $11 and $18 per barrel; it has now surged to $132 per barrel. The FIA ​​contends that this constitutes pure profit for oil companies and cannot be justified. Consequently, international flight operations are now running at a complete financial loss.

Typically, ATF accounts for 30 to 40 percent of an airline's total operating costs. However, this figure has now climbed to between 55 and 60 percent. Compounding this challenge, the Indian Rupee is currently trading at an all-time low against the dollar, subjecting airlines to a "double whammy" of financial pressure.

The FIA ​​Has Presented Three Demands to the Government:

First: The "Crack Band Mechanism," which was established in October 2022, should be reinstated. This mechanism had been discontinued in December 2024. Under this mechanism, the price differential between crude oil and ATF was maintained within a fixed range.

Second—the 11% excise duty levied on ATF for domestic flights should be temporarily removed or suspended.

Third—VAT should be reduced in key states. Delhi levies a VAT of 25% on ATF, while Tamil Nadu levies 29%. In Mumbai, Bengaluru, Hyderabad, and Kolkata, the rate ranges between 16% and 20%. These six cities account for over 50% of the country's airline operations.