India’s state-run oil refiners have kept domestic aviation turbine fuel (ATF) prices unchanged for June at Rs 104,927 per kiloliter (around $1,104). Airlines had requested a pause in fuel price hikes due to pressure from the Iran conflict and rising operating costs.
ATF prices had already increased 8.6% in April and remained unchanged in May. Refiners have also lowered ATF prices for international flights to provide some relief to airlines.
The government has announced support measures for the aviation sector, including parking fee rebates and lower departure fuel taxes at Delhi and Mumbai airports. However, airlines continue to face higher costs from the weak rupee, which increases aircraft lease payments and overseas airport expenses.
Rising fuel costs are now hitting domestic airlines as well. Air India, IndiGo and Air India Express have announced flight reductions due to expensive aviation fuel and weaker travel demand.
Air India will temporarily reduce frequencies on selected domestic routes between June and August. From August 1, Air India plans to cut around 22% of domestic services, Air India Express about 10%, and IndiGo 5% to 7%, removing nearly 250 flights per day.
Routes connected to Mumbai, Delhi and Bengaluru could see the biggest impact. IndiGo has also cut international capacity by 17%. Brent crude prices remain elevated due to West Asia tensions, keeping aviation fuel prices above Rs 1 lakh per kiloliter and raising the risk of higher airfares.
According to ICRA, domestic passenger traffic fell 1.6% year-on-year to 140.8 lakh passengers in April 2026. Traffic was also 2% lower compared with March 2026 levels.
ICRA said international passenger traffic carried by Indian airlines grew 3.9% in FY26, below its earlier forecast of 7% to 9%. The agency also noted that ATF prices in May were 23.5% higher than a year earlier, largely due to the impact of the West Asia conflict.
