Aviation fuel: Indian airlines threaten to stop services

Muscat: India's main airlines, IndiGo, Air India and SpiceJet, have asked the government to intervene and warned of shutting down operations as they are affected by the airspace closures due to the war.

The Federation of Indian Airlines FIA, which represents the three airlines, wrote to the civil aviation ministry seeking same fuel pricing mechanism uniformly across both domestic and international operations.

The global aviation fuel prices, which was round $96 per barrel before the start of the war on February 20, climbed to $209 in the first week of April before dropping to $176.45 to the week ending April 24.

As global aviation fuel prices more than doubled to $180-190/barrel since the war broke out in West Asia on February 28, the Indian government last month limited the hike to `15 per litre for domestic operations. However, for international operations, the price rose by `73 per litre.

Fuel prices are still highest in Asia (Around $181) and Europe (around $187) compared to the Middle East (around $174) and North America (around 172).

Aviation fuel prices account for 30-40% of an airline’s overall operating cost. Following the April hike, this percentage band increased to 55-60%.

The letter said the ‘irrational increase’ in ATF prices will result in ‘insurmountable losses’ for airlines, grounding of aircraft and cancellation of flights. “In order to survive, sustain and continue operation, we request your urgent intervention for immediate and meaningful financial support to tide over the current situation,” said the letter dated April 26.

The summer holidays of various Indian schools in Oman will begin earlier than usual this year, coinciding with the Eid al-Adha holidays, which are expected to be in the third week of May.

According to estimates analyzed by the Observer, the airfare trends from Oman to India starting May 21, 2026, are showing a major upward trajectory due to the peak holiday season, coupled with issues such as fuel surcharges and disruptions in the supply of aviation fuel in some markets.

Prices for late May are currently 20 to 50 percent higher, with the one-way fare touching the RO100 to RO150 range for most of the demand days. Fares do vary depending on the weekends, weekdays, and other factors.

Currently, Mumbai (served by OmanAir, SalamAir, and Air India Express) is the most competitive route with fares starting around RO55–65 due to high frequency and multiple options, which can be rated as above average but reasonable under circumstances.

Fares to destinations like Hyderabad, Delhi, and Bengaluru have been affected by the reduction in the capacity and subsequent uncertainties in the frequency of Indian operators.

The International Energy Agency (IEA)'s assessment of potential jet fuel shortages is sobering. We have also estimated that by the end of May we could start to see some cancellations in Europe for lack of jet fuel. This is already happening in parts of Asia. Along with doing everything possible to secure alternative supply lines, it’s important that authorities have well-communicated and well-coordinated plans in place in case rationing becomes necessary, including for slot relief,” said Willie Walsh, IATA's Director General.

According to the International Energy Agency’s (IEA) latest oil market report, global jet fuel demand averaged 7.8 million barrels/day in 2025, with 2 million barrels/day traded internationally.

Gulf exporters accounted for 400,000 barrels/day, around 20% of global trade, making them the single largest supply source. The loss of these flows has created a deep structural imbalance.

The supply tightness is set to worsen as refinery runs decline, with the IEA forecasting a one million barrels/day year-on-year decline in global crude runs in 2026, translating into 200,000 barrels/day lower jet supply versus pre-conflict levels. The impact could peak in the second quarter with up to 500,000 barrels/day removed from the market.