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 affecting domestic operations as well. Air India said it will temporarily reduce flight frequencies on selected domestic routes between June and August, after previously cutting some international services.
IndiGo has also announced capacity reductions. The airline plans to cut domestic capacity by 5% to 7% and has already reduced international capacity by 17%. Brent crude oil prices remain elevated because of tensions in West Asia, keeping ATF prices above Rs 1 lakh per kiloliter.
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.
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