Despite ATF cap for domestic flights, airfares go up with IndiGo raising surcharge

 Despite the Centre stepping in to limit the impact of the aviation turbine fuel (ATF) hike by capping the increase at about 8.5% for domestic travel and assuring there would be no additional fuel-linked levy while jet fuel prices rose nearly 100% for other international and chartered flights, IndiGo raised its fuel surcharge to up to ₹900 on domestic routes and as much as ₹10,000 on flights to Europe.

On Wednesday, ATF prices for international operations by Indian carriers and chartered flights were nearly doubled to ₹2,07,341.22 per kilolitre from ₹96,638.14 last month. But domestic air travel was relatively shielded, with a modest 8.5% increase to ₹1,04,927.18 per kilolitre. Calculated on retail prices of petrol by including taxes, Petroleum Ministry Joint Secretary Sujata Sharma explained that there was a 25% increase.

“This calibrated approach will help shield passengers from sharp fare increases, ease the burden on domestic airlines, and support the continued stability of the aviation sector at this crucial juncture,” Minister for Ram Mohan Naidu wrote in a post on X. He added that the move will also benefit the broader economy by ensuring the smooth movement of cargo and maintaining vital air connectivity for trade and logistics.

The announcement by oil marketing companies was followed by IndiGo raising its fuel surcharge further, after reintroducing the levy last month in response to rising fuel prices.

Instead of a flat ₹425 fuel charge for all domestic passengers it announced last month, IndiGo has rationalised domestic surcharges which now range between ₹275 and ₹950 depending on distance, effectively reducing the burden on shorter routes.

In contrast, international fuel charges have seen a steep increase. Previously ranging from ₹900 to ₹2,300 per sector depending on region, the revised charges now go up to as high as ₹10,000 for long-haul routes such as Europe, reflecting the sharp rise in ATF prices for international operations. The new surcharges come into effect from April 2.

The hike in price came amidst Centre’s reassurance that there would not be any further airfare hike.

“The move prevents a potential industry-wide crisis,” Joint Secretary, Ministry of Civil Aviation Asangba Chuba said about the special intervention made by the government for domestic air travel during an inter-ministerial press briefing.

He added, “the limited increase of 25% in ATF prices will allow airlines to offer competitive pricing avoiding the additional fuel surcharges that would have been necessary under the market linked dynamics.” He later explained the statement and said, “this intervention will effectively make sure that airlines will either recalibrate and pull back the [last] surcharge. But the calculation is such that there will be no further fuel surcharge,” indicating at some backroom persuasion by the government.

However, following the West Asia crisis, airlines are already grappling with multiple challenges. These include longer flight paths as airlines avoid Iranian airspace on top of the continued closure of Pakistani airspace since April 2025, which has led to higher fuel burn and operating costs. They are also facing a sharp rise in war-risk insurance premiums for operations over Gulf airspace, as insurers reassess exposure amid the conflict, further adding to cost pressures. 

Despite IndiGo raising its fuel surcharge, airline executives remain concerned about the impact on demand. One executive said the surcharge introduced last month had already dented consumer appetite, leaving little room for any further fare increases.

Executives are also considering cutting flights, as keeping aircraft in operation is becoming increasingly expensive. “We will have to scale back both domestic and international operations,” said one airline official. 

Air India Express has already seen nearly 30% of its fleet taken out of active deployment. While the aircraft are not formally grounded, they are being rotated out following the cancellation of a significant portion of its Gulf-heavy routes, where the airline has a strong presence.