With the growing demand for air travel and the expansion of the aircraft fleet, airlines are facing serious difficulties due to high aviation fuel prices. Despite the increase in the number of aircraft and capacity, some airlines are forced to reduce the number of flights.
A major regional airline, Star Air, which operated 68 daily flights in the summer, reduced this number to 52 in the winter schedule. The reason for this was the increased cost of kerosene, or aviation turbine fuel (ATF), which made conducting additional flights economically unviable.
In this regard, airlines have appealed to the Ministry of Civil Aviation to resume the price stabilization program for ATF. Companies believe that the return of this program with some changes could bring them relief.
The main problem for airlines is the sharp jump in aviation fuel prices. In March 2026, the price of ATF in India was about ₹105 per liter, but by April it rose to approximately ₹207 per liter. When the government approved the price stabilization plan in June, the cost of ATF was about ₹115 per liter, and in October it reached approximately ₹137 per liter. Even considering the decrease in prices compared to April, fuel remains a significant expense for airlines. According to industry experts, more flights now mean not so much more profit as an increase in costs.
This forces not only regional but also large airlines to revise their operational activities. The rise in fuel prices is exacerbated by the international situation. Geopolitical tensions in the Middle East have led to restrictions on air routes and operational difficulties.
Air India and Indigo are already feeling the consequences of restrictions on using Pakistani airspace. At the Aviation India event in Delhi, Air India's CEO, Tevold Gebremariam, raised this issue. He noted that international competitors are not facing similar problems related to airspace, which creates additional operational pressure on Indian airlines.
To alleviate the situation for airlines facing sharp fluctuations in ATF prices, the government centrally approved a program in June 2026. Under this plan, the Cabinet decided to provide Oil Marketing Companies (OMCs) with a one-time budgetary assistance of up to ₹10,000 crore. The goal of this initiative was to protect Indian airlines from sudden increases in ATF prices for both domestic and international flights. This program was presented as the ATF Price Stabilization Fund (PSF). However, because airlines showed no interest, it was closed about a month after its approval.
Airline representatives point out that the initial proposal contained conditions that caused companies to be reluctant to participate in the program. One senior airline employee told the publication Aaj Tak that the companies disagreed with the condition of purchasing fuel only from one specific oil marketing company. Furthermore, the program required the immediate signing of a Memorandum of Understanding (MoU) and the termination of previously concluded agreements. According to this employee, at the time, companies did not anticipate such a sharp rise in ATF prices. Now that the situation has changed, airlines are ready to consider participation if the government revives the old program with amendments.
Regional airlines insist that when the program is resumed, the government should take into account their operations and network. A representative of a regional airline noted that four regional operators use about 3% of the country's total ATF consumption, but they operate flights on 30–35% of routes where other airlines show no interest. These companies play an important role in ensuring air connectivity in small towns and areas where it is not profitable for large operators to fly. Therefore, they ask the government to consider favorable conditions for regional airlines in the Price Stabilization Fund.
Nevertheless, not all regional companies demand special benefits. Another senior employee stated that they do not need any particular privilege, but if the government resumes this program in light of the high cost of kerosene, it will be a relief for the entire industry. Currently, airlines are trying to balance costs and flights. If fuel remains expensive, companies may reduce flights on certain routes or postpone plans to launch new destinations, which could negatively affect passengers from small towns, where regional airlines are the primary means of communication.



