Surge in Jet Fuel Prices Affects Indian Aviation Amid Middle East Tensions

The Indian aviation sector is facing a significant challenge as jet fuel prices soar due to ongoing geopolitical tensions in the Middle East. With a historic increase of 114.5%, the cost of Aviation Turbine Fuel has reached unprecedented levels, raising concerns about the financial strain on airlines and the potential for higher ticket prices for travelers. Experts suggest that airlines may need to adjust their pricing structures to cope with these rising costs, which could lead to increased airfare. This article explores the reasons behind the price surge and its implications for passengers and the aviation industry.

By Narendra Chaudhary Apr 1, 2026, 12:00 IST

Impact of Geopolitical Tensions on Indian Aviation

The ongoing geopolitical unrest in the Middle East is beginning to significantly impact the Indian aviation sector. Recently, there has been a historic increase in the prices of Aviation Turbine Fuel (ATF), commonly known as jet fuel, in India. State-owned oil companies have raised ATF prices by a staggering 114.5%, pushing the cost in Delhi to a record high of ₹2.07 lakh per kiloliter.

Record Price Hike

This substantial increase of ₹110,703.08 per kiloliter marks the first instance where ATF prices have exceeded the ₹2 lakh threshold. This surge surpasses the previous peak recorded in 2022, following the onset of the conflict between Russia and Ukraine. After a 5.7% hike on March 1, this marks the second consecutive month of rising prices. Given that fuel costs account for nearly 40% of operational expenses, airlines already facing financial strain due to airspace restrictions in the region are expected to experience further economic pressure. Reports suggest that airlines may adjust their pricing strategies to cope with rising costs, potentially leading to increased airfare.

Reasons Behind Rising Jet Fuel Prices

The ongoing conflicts in the Middle East have severely disrupted the oil supply chain. Major oil producers like Kuwait, Saudi Arabia, and Iraq have reduced production, while export routes are under increasing pressure. Attacks by Iran on commercial vessels and critical infrastructure have further destabilized the region. This situation has nearly halted traffic through the Strait of Hormuz, which is crucial for approximately one-fifth of global oil shipments.

Impact on Passengers

Experts have indicated that travelers should brace for higher ticket prices as airlines reassess their fare structures. Airlines may implement fuel surcharges or increase existing ones, a practice commonly seen outside the United States. The aviation industry has also been grappling with operational challenges since airspace closures began on February 28. Reports indicate that Indian airlines are already incurring higher fuel costs due to longer alternative routes for many international flights. Last month, several domestic airlines raised their fuel surcharges, and the International Air Transport Association has noted fare increases in the region due to the ongoing turmoil.

How Prices Are Determined

It is important to note that Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum adjust ATF and LPG prices on the first day of each month. These adjustments are based on fluctuations in global benchmarks and currency exchange rates, which have remained volatile due to geopolitical uncertainties.