The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, has warned that the West Asia crisis is putting the sector under severe financial strain. It has asked the government for urgent intervention. The Quint, citing Deccan Herald, reports that the FIA's letter says the industry is on the verge of stopping operations without help.

What the FIA Is Asking For

  • A revision of the ATF (aviation turbine fuel) pricing mechanism.
  • A temporary suspension of excise duty on jet fuel for domestic operations.
  • "Immediate and meaningful financial support" to help carriers survive.

The FIA also pointed to high state taxes. According to its letter, Delhi levies 25% VAT on ATF and Tamil Nadu charges 29%. It said an 11% excise duty rises sharply when fuel prices and rupee depreciation combine.

Why Costs Have Surged

  • Fuel prices: the FIA said ATF jumped from $87.24 a barrel to a peak of $260.24, then eased to $235.63. It described this as a 295% rise against March 2025 levels.
  • Fuel share of costs: reported at 40% of operating expenses in one account. Another report cites a rise from the usual 30-40% to 55-60%.
  • Rerouting: regional airspace closures mean longer flights and higher fuel burn. Gulf routes can also run with empty seats on one leg.
  • Rupee: depreciation adds to fuel costs.

The Conflict Behind the Crisis

The conflict involving the US, Israel and Iran began on February 28. A blockade of the Strait of Hormuz disrupted global oil flows and pushed Brent crude sharply higher.

What the Government Has Done

  • Emergency credit: in April, the Centre was reported to be considering a roughly Rs 4,000 crore credit facility. It would include a sovereign guarantee on loans of up to Rs 1,000 crore per airline.
  • ATF support: in Parliament, the government cited one-time budgetary support of up to Rs 10,000 crore for oil marketing companies, to stabilise ATF prices for scheduled Indian airlines.
  • Passenger measures: a 24x7 control room, refund and rescheduling directions, and help for stranded Indian nationals.
  • Disruption: the government told Parliament that about 26,000 flights were disrupted until July 20. It acknowledged significant losses but did not quantify them.

Key Takeaways

  • The FIA says airlines face extreme stress from fuel prices, taxes and rerouting.
  • Its main asks are ATF pricing reform and a temporary excise duty suspension.
  • Government support so far is aimed mainly at stabilising fuel prices and easing credit.