Air India to Reduce Flights Amid Rising Aviation Fuel Costs

India’s aviation sector is once again facing turbulence as rising fuel costs begin to weigh heavily on airline operations. Air India, now owned by the Tata Group, is reportedly planning to reduce approximately 100 flights per day starting June, a move that highlights the mounting financial strain caused by escalating aviation turbine fuel (ATF) prices.

The airline currently operates nearly 1,100 flights daily across domestic and international routes. The proposed cuts will impact both segments, though long-haul international routes—particularly those connecting to Europe, North America, and Australia—are expected to bear the brunt of the reductions.

Rising Fuel Costs Trigger Operational Cuts

Global Fuel Price Pressures

Airlines worldwide are grappling with elevated jet fuel prices, which have surged due to global supply constraints, geopolitical tensions, and fluctuating crude oil markets. Fuel costs typically account for 30–40% of an airline’s operating expenses, making them one of the most critical cost drivers.

For Air India, the situation has become increasingly challenging following a recent hike in ATF prices by over 5 percent—marking the second consecutive monthly increase. In Delhi, fuel prices have risen sharply by $76.55 per kilolitre to $1,511.86 per kilolitre, further tightening margins for carriers.

Domestic vs International Impact

Disproportionate Pressure on Long-Haul Routes

While domestic operations are not immune to rising costs, international routes are significantly more exposed. Long-haul flights consume larger quantities of fuel, making them more vulnerable to price volatility.

Air India, which has been aggressively expanding its global footprint in recent years, is particularly affected. Its extensive international network means higher operational costs compared to domestic-focused carriers.

Government Measures and Industry Relief

Partial Shielding for Domestic Airlines

To cushion the impact of rising fuel prices on passengers and the broader economy, the government has taken steps to limit the burden on domestic airlines. During the previous price hike—where jet fuel prices more than doubled—only 25 percent of the increase was passed on to Indian carriers. In contrast, international airlines had to absorb the full cost escalation.

These measures were part of broader efforts to stabilise ticket prices and prevent a sharp increase in travel costs for consumers.

Industry Concerns and Warning Signals

Federation of Indian Airlines Raises Alarm

The decision by Air India comes shortly after the Federation of Indian Airlines raised concerns about the sustainability of airline operations under current cost pressures. In a letter to the Ministry of Civil Aviation, the federation highlighted the severe challenges posed by rising ATF prices.

While seeking “urgent support” from the government on ATF pricing, the federation warned that the airline industry in India was under extreme stress and “on the verge of closing down or stopping its operations.”

Competitive Landscape: IndiGo vs Air India

Different Business Models, Different Impacts

Although IndiGo remains the largest airline in India by market share, Air India is more exposed to international market fluctuations. IndiGo’s predominantly domestic and short-haul model allows it to better manage fuel costs compared to Air India’s long-haul operations.

This structural difference explains why Air India is among the most affected carriers despite not being the largest in terms of passenger volume.

Implications for Passengers

Potential Disruptions and Higher Fares

The planned reduction in flights could lead to:

• Reduced seat availability on key routes
• Increased ticket prices due to supply constraints
• Potential rescheduling or cancellations for passengers

Travelers, especially those planning international trips, may face limited options and higher costs in the coming months.

Broader Impact on India’s Aviation Sector

Recovery at Risk

India’s aviation industry has been on a recovery path following the pandemic, with passenger traffic steadily rising and airlines expanding capacity. However, the current fuel price surge threatens to slow down this momentum.

Airlines are now being forced to strike a delicate balance between maintaining operations and controlling costs. Prolonged fuel price volatility could lead to further capacity cuts, delayed expansion plans, and increased financial stress across the sector.

Conclusion

Air India’s decision to cut around 100 daily flights underscores the severity of the challenges facing the aviation industry amid rising fuel costs. While government interventions have provided some relief, especially for domestic operations, the pressure on international routes remains intense.

As global energy markets continue to fluctuate, airlines may need to adopt more cost-efficient strategies, optimise routes, and explore alternative revenue streams. For passengers, the near-term outlook suggests higher fares and fewer options, particularly on long-haul routes.

Ultimately, the situation highlights the need for sustained policy support and innovative solutions to ensure the long-term stability and growth of India’s aviation sector.