Aviation Turbine Fuel (ATF)
Pricing and Airline Economics
Aviation Turbine Fuel (ATF) is the single largest operating cost for Indian airlines, accounting for approximately 40% of total operating costs. ATF prices in India are import-parity based (linked to Platts FOB Arabian Gulf benchmark) and not subject to the Administered Price Mechanism (which was dismantled in April 2001).
- ATF prices in India include: import price of crude + Customs Duty (10%) + Excise Duty (8.16% including cess) + State sales tax (averaging ~23% across states) + freight + OMC markup.
- During the West Asia conflict, Indian carriers faced a 50% surge in ATF prices; the government intervened to cap domestic ATF price increases at 25%.
- Rerouting of flights (e.g., flying south around Iran instead of north over Iranian airspace) adds significant fuel burn, compounding ATF cost pressures.
- Akasa Air and IndiGo introduced fuel surcharges to partially pass on cost increases to passengers.
- The UDAN scheme (Ude Desh ka Aam Naagrik), India's regional connectivity scheme, uses viability gap funding to keep fares affordable; ATF cost shocks disrupt this subsidy calculus.
● Tracked since March 11, 2026 · last seen March 27, 2026 · updates as the daily brief publishes
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