In a bid to insulate domestic airlines from the surge in international oil and fuel prices due to the West Asia crisis, the public sector oil marketing companies (OMCs) have kept the price of aviation turbine fuel (ATF), or jet fuel, unchanged for scheduled domestic flights for the second month in a row. Additionally, relief also came for Indian carriers in the form of a 27% cut in jet fuel price for international flights. With this cut, the price of jet fuel for international flights has come down to levels similar for domestic flights.Indian airlines had made repeated pleas to the government to cap the hike in jet fuel prices, while also seeking parity between fuel prices for domestic and international flights. The three OMCs—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—usually revise prices of ATF and some other fuels in tandem on the first of every month in line with international prices.On April 1, the government had announced that the OMCs were hiking the ATF price for scheduled domestic flights only partially—by 25% or Rs 15,000 per kilolitre (kl)—to Rs 1,04,927 per kl, at the country’s largest and busiest airport Delhi. However, the full pass-through was announced for international flights, translating to a steep hike of about Rs 73,000 per kl. This market-linked price is also charged for non-scheduled flight operations, like private jet operations.For May, ATF price for domestic flights was kept unchanged, while for international flights, it was hiked by $76.55 per kl to $1,511.86 per kl. For June, while the price of jet fuel for domestic flights continues to be the same, for international flights, it has been cut by abut $400 per kl to around $1,100 per kl, according to OMC sources. In rupee terms, it comes out to be around Rs 1,05,000 per kl.Major Indian airlines had urged the government for changes in the ATF pricing formula by reintroducing “crack spread bands” to limit how much OMC’s can charge as margin on jet fuel, and to bring parity between prices for domestic and international flight operations.Usually, ATF accounts for about 40% of Indian airlines’ operational costs; the price surge had led to a further increase to 55-60%, according to an Indian airline association. The hike in jet fuel prices resulted in most major airlines increasing fuel surcharges, particularly for international flights, even as they claimed that the surcharges would set off only a part of the cost escalation.ATF prices in India are linked to the Mean of Platts Arab Gulf (MOPAG), a price assessment by S&P Global based on jet fuel prices in West Asia. In 2022, a “crack band” of $12-22 per barrel was established to cap OMCs’ margins during abnormal price fluctuations. The crack spread is the difference between the price of crude oil and products like ATF derived from it. But this crack band was discontinued in late 2024 mutually by airlines and OMCs. With the global ATF price surge, the airlines wanted the band to be reintroduced and parity to be brought in between fuel pricing for domestic and international operations.Story continues below this adThe surge in jet fuel prices for international flights led to additional strain on Indian airlines’ international flight operations, which were already under stress due to the continued closure of Pakistan’s airspace since late April of last year. The airspace restrictions amid the West Asia war further hit them.While all major Indian carriers have been impacted due to the crisis, Air India has been hit the worst, as it is the only Indian airline with significant operations to and from Europe and North America. On May 13, Air India had announced substantial cuts to its international network. Then on May 27, the airline also confirmed that it was curtailing its domestic flight schedule as well for at least two months amid the headwinds due to the West Asia crisis.According to information provided by the airline and flight schedules filed by it, about 250 weekly international flights—outbound and inbound—have been cut for the June-August period. This reduction is on top of flights that have been cut in recent weeks amid the West Asia war. As per data from aviation analytics firm Cirium, Air India will be operating about 27% fewer international flights in June-August than it did in the corresponding period of last year. For June-July, the airline’s domestic flights have been cut by about 27% from April-May levels, according to Cirium data.Also Read | To insulate Indian flyers, jet fuel price for domestic flights kept unchanged; hiked for overseas flights“In continuation of our previously announced adjustments to select international services between June and August 2026, we have temporarily rationalised operations on certain domestic routes during the same period, with a reduction in frequencies on select routes. These adjustments are driven by the sustained impact of high fuel prices on overall operations,” an Air India spokesperson said on May 27.Story continues below this adThe West Asia war, which began on February 28, has led to major airspace disruptions in the Gulf region, which accounts for a significant chunk of international air traffic to and from India. The region also serves as a critical corridor for Air India’s flights to Europe and North America, which means that apart from disrupting operations to destinations in West Asia, the war has forced the airline to take longer, circuitous routes to Europe and beyond.This is leading to higher operating costs, particularly due to additional fuel burn at a time when jet fuel prices are also surging due to war-related supply disruptions. The West Asian airspace closures have added to complications for Indian airlines, which had already been grappling with the continued closure of Pakistan’s airspace.“In order to ensure uninterrupted operation of airlines within India, FIA earnestly requests the Ministry’s urgent intervention to review the ATF cost challenges in consultation with the relevant Ministries and stakeholders and also respectfully request the Government to extend the same fuel pricing mechanism uniformly across both domestic and international operations as was done in the past with the establishment of Crack (margin) Band. Applying the same framework consistently will ensure parity, reduce the financial burden and enable Indian airlines to compete more effectively with global counterparts,” the Federation of Indian Airlines wrote in a letter to the Ministry of Civil Aviation (MoCA) late April.