NEW DELHI: India’s aviation industry is sending out a distress signal. In an urgent letter dated 26th April 2026, the Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, told the Ministry of Civil Aviation that the sector is under “extreme stress” and teetering on the edge of a total operational shutdown. The language is stark. The situation, the numbers suggest, is starker.
Three forces have converged to produce the crisis, and none of them is going away quietly.
The first is the West Asia conflict. The ongoing hostilities involving the United States, Israel and Iran have forced the closure of critical airspaces, compelling Indian carriers to fly substantially longer routes to Europe and the Americas. The operational toll has been severe: more than 15,400 flights were cancelled between late February and late April 2026. Connectivity to the West Asia region has collapsed by 75 per cent, with daily flights falling from 200 to just 55.
The second is the fuel shock. Aviation turbine fuel (ATF) typically accounts for 40 per cent of an airline’s operating costs. Disruption around the Strait of Hormuz has driven jet fuel to $195 per barrel, pushing ATF’s share of operating expenses to nearly 60 per cent for some carriers. The government capped domestic ATF price increases at Rs 15 per litre, but international prices have surged by Rs 73 per litre, creating what the FIA calls a massive financial “imbalance” for airlines running hybrid networks.
The third is currency. The rupee’s slide against the dollar has squeezed margins further still, since aircraft leasing, maintenance and spare parts are all dollar-denominated costs. Each tick downward in the exchange rate lands directly on the balance sheet.
The FIA’s letter is, in effect, a formal plea for a life-support package. It is asking the government to temporarily suspend the 11 per cent excise duty on ATF. It is pressing states to cut their fuel taxes — Tamil Nadu currently levies 29 per cent VAT on ATF, Delhi 25 per cent. The government is reportedly weighing an emergency credit line of Rs 5,000 crore under the Emergency Credit Line Guarantee Scheme to provide immediate liquidity to the most vulnerable carriers. Separately, efforts are under way to secure clearance for the Hotan route through China, which would allow Air India to bypass Pakistan on westward flights and save significantly on fuel.
The FIA’s letter to the government does not mince words. “The dire condition of the aviation sector has been exacerbated by the West Asia war,” it states. “Any irrational increase in the price of ATF will result in insurmountable losses and lead to grounding of aircraft.”
The human and economic toll is already mounting. Industry analysts estimate revenue losses for the sector at Rs 17,000 to Rs 18,000 crore for the current financial year. More than 13.6 lakh passengers have been affected by cancellations and rerouting in the past 60 days alone. IndiGo, which holds a 64 per cent share of the domestic market, has seen its target price downgraded by UBS on account of geopolitical risk. SpiceJet, perennially the most financially exposed of India’s major carriers, has reportedly struggled to meet salary and statutory payment obligations in recent months.
If relief does not arrive before the summer peak, analysts warn that several smaller carriers may not survive it. The West Asia war did not create India’s aviation vulnerabilities — years of thin margins, high taxes and dollar-denominated debt did that. The war has simply made them impossible to ignore. The runway is running out.
