The Second Hike in Two Months
State-owned oil marketing companies have increased the price of Aviation Turbine Fuel (ATF) for the second consecutive month. On September 1, 2026, jet fuel prices were hiked by 5.46%, or about ₹6.28 per litre. This follows an earlier increase in August,
pushing the price of ATF in Delhi to ₹121.28 per litre. After a brief reduction in July that brought the rate down to ₹110, prices have now climbed by over ₹11 in just two months, reversing the relief for domestic carriers. This surge is directly linked to rising global crude oil prices, which have climbed above $91 per barrel due to geopolitical tensions and supply concerns.
Why Jet Fuel Is an Airline's Biggest Headache
For any airline in India, fuel is the single largest operating expense. ATF accounts for a massive 35-40% of an airline's total costs. This is significantly higher than the global average of around 25%, primarily because of high domestic taxes. When the cost of this crucial input jumps by over 5%, it places immense pressure on an airline's profitability. Unlike a factory that can scale down production, airlines cannot easily cancel flights without losing revenue and market share, creating a difficult balancing act between managing costs and maintaining schedules. Industry experts estimate that the latest 5.46% hike in ATF could translate to a direct 2-2.5% increase in an airline's overall input costs.
Will Airlines Pass the Cost to Passengers?
This is the critical question for travellers. While airlines are feeling the financial squeeze, their ability to simply raise ticket prices is complicated. India's aviation market is highly competitive, and steep fare hikes could deter potential passengers from flying. However, industry experts and airline officials agree that if high fuel prices are sustained, passing on at least a portion of the cost to consumers is inevitable. The upcoming festive season, which includes Dussehra and Diwali, is a period of high travel demand. Airlines may use this strong demand as an opportunity to implement fare increases to offset the higher fuel expenditure. The extent of the hike will likely depend on the competition on specific routes and overall passenger demand.
More Than Just Fuel: Other Factors at Play
While the ATF price is the main driver, other elements also contribute to the final ticket price. The exchange rate between the Indian Rupee and the US Dollar is crucial, as oil is traded in dollars. A weaker Rupee makes fuel imports more expensive. Furthermore, India’s domestic aviation market has seen significant consolidation. With fewer airlines operating, there is less downward pressure on fares. Airport charges and various central and state taxes on ATF, which can be as high as 20-30% in some states, also add to the high operating cost environment for Indian carriers. All these factors combined mean that airlines have very thin margins and are sensitive to any rise in costs.
