India’s two largest airlines, IndiGo and Air India, have asked the India government to reduce aviation fuel taxes and persuade private airports to lower certain charges as the ongoing conflict involving Iran raises operational costs.
According to a report by Reuters, the airlines are facing increased financial pressure because the war has complicated the use of airspace across parts of the Middle East. At the same time, Indian carriers remain barred from using the airspace of Pakistan due to diplomatic tensions with New Delhi. The combination of these factors has forced airlines to adopt longer and more expensive routes for international flights.
As a result, IndiGo has reportedly begun routing some flights to the United Kingdom via Africa, while Air India has added stopovers on certain flights to United States destinations in order to manage fuel requirements and flight operations.
The airlines are lobbying the government for financial relief, particularly regarding aviation turbine fuel taxes. Fuel accounts for about 30–40 percent of airline operating costs in India. Currently, aviation turbine fuel carries a federal tax of around 11 percent, with additional state levies that can reach up to 29 percent.
In addition to tax reductions, the airlines have asked the government to review charges at privately operated airports. They argue that some passenger-related fees and operational charges at private airports are higher than those at state-run facilities and should be rationalised to reduce costs.
Operational disruptions have already had a major impact on flight schedules. Data from aviation analytics firm Cirium shows that from February 28 to March 9, Indian carriers did not operate about 64 percent of their 1,230 scheduled flights to the Middle East, Europe and North America.
Financial analysts have warned that the situation could significantly affect airline profitability. A recent assessment by HSBC described the ongoing conflict in the Middle East as a “significant burden” on Indian airline costs.
Air India has also reportedly asked the government to reduce local taxes on premium economy tickets from 18 percent to 5 percent. The airline, owned by the Tata Group and Singapore Airlines, is already dealing with financial pressure. The carrier previously estimated that the Pakistan airspace ban could cost it around 600 million dollars annually and reported a loss of about 433 million dollars last year.
