The Indian government has stepped in to prevent a sharp increase in jet fuel prices from adversely impacting domestic airlines amid ongoing geopolitical tensions in the Middle East.
On Wednesday morning, state-owned Indian Oil Corporation temporarily doubled aviation turbine fuel (ATF) prices in Delhi to Rs 2.07 lakh per kilolitre for April. Within hours, the price was reduced to Rs 1.04 lakh per kilolitre. The government announced that only a partial and staggered increase would be allowed for domestic airlines, citing expected global price hikes of over 100 percent from April 1, 2026.
To shield consumers from steep fare hikes, the government instructed oil marketing companies (OMCs), in consultation with the Ministry of Civil Aviation, to limit the pass-through of global fuel costs. As a result, domestic airlines will face an approximate 25 percent increase in ticket prices, equating to around Rs 15 per kilolitre. Conversely, airlines operating international routes will bear the full impact of the global price surge, as per market-linked pricing.
Aviation Minister Ram Mohan Naidu emphasized that this strategy aims to protect travelers and maintain sector stability. “This calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, and support the continued stability of the aviation sector at this crucial juncture,” he stated. He also highlighted the importance of maintaining air connectivity for trade and logistics, especially amid the current geopolitical turmoil.
The escalation in energy tensions began with the US-Israel conflict against Iran, which started on February 28 and has since escalated to strikes on energy infrastructure and a blockade of tanker traffic through the Strait of Hormuz. This strategic waterway, responsible for a fifth of the world’s oil and gas shipments, has seen near-total closures, causing disruptions and surging fuel prices globally.
Had the full price increase been passed through, Indian airlines would have faced a significant financial burden, compounding their existing thin margins. Regional carriers from Vietnam to New Zealand have already canceled flights due to rising costs, and China— the world’s largest oil importer— has restricted fuel exports to secure its own supply.
The government’s intervention aims to cushion the domestic aviation industry from these global shocks while ensuring continued connectivity and economic stability.