Govt caps ATF hike at 25% for domestic airlines; IndiGo lauds move

In the turbulent times due to the Iran war and disruptions in oil supply caused by the blockage of the Strait of Hormuz, India's Ministry of Petroleum and Natural Gas has moved to shield domestic airlines from a full fuel price surge.

The ministry has limited the increase in Aviation Turbine Fuel (ATF) prices for domestic airlines to 25%, even as global benchmarks indicated a potential spike of over 100% from April 1.

In a clarification, the ministry said ATF prices in India have been deregulated since 2001 and are revised monthly based on international benchmarks. It noted that the current “extraordinary situation in global energy markets” had led to expectations of a sharp increase in domestic ATF prices.

The ministry also said that in order to insulate domestic travel costs from the substantial increase in international prices, PSU Oil Marketing Companies, in consultation with the Ministry of Civil Aviation, have passed only a partial and staggered increase of 25%, i.e., Rs. 15/litre to domestic airlines. Foreign routes will, however, pay the full increase, consistent with global market prices.

IndiGo expressed gratitude on X, saying, "We would like to thank the Hon'ble Prime Minister for such a significant step for all of us. We also convey our heartfelt appreciation to the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas as this marks a meaningful way forward, enabling greater stability for airlines and allowing us to pass on the benefits through more accessible and affordable travel for our customers."

Civil Aviation Minister Ram Mohan Naidu Kinjarapu highlighted the rationale behind the move, noting that ATF prices faced extraordinary pressure due to global energy disruptions and the closure of the Strait of Hormuz. "In this challenging context, the decision by PSU Oil Marketing Companies to implement only a partial and staggered increase of 25% for domestic airlines is both pragmatic and forward-looking, while ensuring that foreign routes bear the full market-aligned price," he said.

The minister added that the calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, support continued stability of the aviation sector, and benefit the broader economy by ensuring smooth cargo movement and vital air connectivity. Both IndiGo and the minister expressed gratitude to PM @narendramodi and Petroleum Minister Shri @HardeepSPuri for this timely intervention.