IndiGo and Air India have reportedly approached the government seeking financial relief as the ongoing tensions between Iran and Israel continue to disrupt international aviation routes.
According to sources cited by Reuters, IndiGo has urged the government to reduce taxes on aviation turbine fuel, while both airlines have asked New Delhi to push privately operated airports to cut certain passenger and operational charges. The requests come at a time when airlines are facing mounting financial pressure due to airspace restrictions and longer flight routes.
Indian carriers are already unable to use Pakistan’s airspace because of diplomatic tensions between India and Pakistan. The escalating conflict in the Middle East has further complicated flight operations, forcing airlines to avoid large parts of the region’s airspace.
As a result, airlines are being compelled to operate longer routes. IndiGo has rerouted some of its flights to the United Kingdom via Africa, while Air India has introduced additional technical stops on certain services to North America. These changes have increased fuel consumption and operational costs on long-haul routes.
Sources familiar with the matter said the airlines are pressing the government to provide relief on aviation-related taxes and charges. IndiGo has specifically sought reductions in aviation turbine fuel (ATF) taxes. Fuel accounts for nearly 30–40 per cent of an airline’s operating expenses, yet it attracts an 11 per cent federal levy along with state taxes that can reach as high as 29 per cent.
Neither IndiGo, Air India nor India’s civil aviation ministry responded to requests for comment.
IndiGo remains India’s largest airline with a domestic market share of about 63.6 per cent as of January, while the Air India Group accounts for roughly 26.5 per cent.
Industry concerns have also extended to airport charges. According to sources, both carriers have asked authorities to review fees imposed at privately managed airports, arguing that some passenger-related charges are higher than those at government-run airports and should be rationalised.
Data from aviation analytics firm Cirium shows that between February 28 and March 9, India’s two largest international airlines were unable to operate 64 per cent of their 1230 scheduled flights to the Middle East, Europe and North America following the escalation in hostilities.
Meanwhile, HSBC recently warned that the current geopolitical situation in the Middle East could place a ‘significant burden’ on the cost structure and profitability of Indian airlines.
Air India has also sought a reduction in taxes on premium economy tickets to 5 per cent from the existing 18 per cent. The airline, owned by Tata Group and Singapore Airlines, has previously estimated that the ban on Pakistani airspace, in place since April 2025, could cost it around USD 600 million annually.
The carrier, which was privatised in 2022 after being sold by the Indian government, reported a loss of USD 433 million last year.
