NEW DELHI (The Thursday Times) — Indian airlines have spent much of 2026 telling anyone who will listen that they are running out of road. In April, the Federation of Indian Airlines — the industry body representing Air India, IndiGo and SpiceJet, which between them account for nearly the whole of India’s domestic and international carrier market — warned publicly that the sector was close to shutting down or halting operations altogether. The South China Morning Post reported that the federation pinned the blame squarely on the price of jet fuel, driven sharply higher by the Iran war and the closure of the Strait of Hormuz.
Six months on, the warning has not gone away. The federation went back to the Indian government this month to press for relief, and the numbers it is citing show why. According to the Free Press Journal, which reported on Air India, IndiGo and SpiceJet jointly lobbying New Delhi, jet fuel’s share of airline operating costs has risen from roughly 30-40% to 55-60% — nearly doubling in a matter of months. For an industry that runs on thin margins at the best of times, that is not a rounding error. It is a different cost structure entirely.
Why the Strait of Hormuz matters to a plane ticket
The mechanism is straightforward, even if the geography is distant. The Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula, carries a large share of the world’s seaborne crude oil and liquefied natural gas. When the Iran war put that chokepoint at risk and disrupted shipping through it, global oil and refined-fuel prices jumped — and aviation turbine fuel, or ATF, was among the most exposed products on the list.
Airlines are unusually bad at absorbing that kind of shock. Unlike a manufacturer that can substitute a cheaper input or a shipping firm that can slow steam to save fuel, an airline cannot simply fly a different kind of fuel, and hedging only goes so far when prices move this fast and this far. Fuel typically makes up a third or so of an airline’s costs in calmer times; when the price of the input itself spikes and the share of the cost base it occupies spikes too, the two effects compound each other.
A harder hit for Indian carriers specifically
India is especially exposed to this kind of shock. The country imports the large majority of the crude oil it consumes, and much of that supply moves through Gulf shipping lanes that run close to, or through, the Strait of Hormuz. On top of that, Indian carriers have long complained — with justification — that domestic ATF pricing carries a heavy state and central tax burden, a structural grievance that predates this crisis by years. That tax layer does not cause a global price spike, but it does mean Indian airlines feel a bigger share of any spike than carriers in markets where fuel is taxed more lightly.
There is a second, compounding pressure specific to this moment: Pakistan’s closure of its airspace to Indian carriers, a separate dispute covered in detail elsewhere, has forced some Indian flights onto longer westbound routings. Longer routes burn more fuel, which means the airspace restriction is landing on top of an already-inflated fuel bill rather than instead of it.
Lobbying language, real financial pressure
It is worth being precise about what “close to shutting down” actually means here. This is the language of an industry lobbying group trying to secure concessions from government — tax cuts, a subsidy, or some form of price intervention on ATF — and it should be read with that purpose in mind. No major Indian carrier has actually ceased operations because of the fuel-cost spike. The warnings are real signals of financial strain, not an announcement that planes are about to stop flying.
What has actually happened, so far, is quieter than collapse: carriers trimming routes to protect margins, a wave of public warnings aimed at New Delhi, and now a second, more urgent round of lobbying in October after the first one in April failed to produce the relief the industry wanted. Whether the government moves on tax or pricing policy will likely determine whether this remains a cost-control story or becomes something sharper. For now, the federation’s own numbers — fuel’s share of costs nearly doubling in half a year — are the clearest evidence that the pressure is genuine, even if the industry’s preferred word for it is doing some of the lobbying on its own.∎
