Indian public sector oil companies have pushed aviation turbine fuel (ATF) to an unprecedented level, with prices in New Delhi reaching Rs 207,341.22 per kiloliter — the first time domestic jet fuel has crossed the Rs 200,000 mark. The surge, reported on April 1, 2026, follows severe global supply disruptions linked to the US–Israel war with Iran and a sharp depreciation of the Indian rupee.
Scale and context
– The new rate more than doubles earlier levels and eclipses the previous peak of about Rs 110,000 seen in 2022 after Russia’s invasion of Ukraine.
– Prices for jet fuel used on international routes jumped by about 107%.
– Airlines had already imposed fuel surcharges in March as crude oil prices climbed amid the Middle East crisis.
Causes
Analysts and officials point to two main drivers:
– Disruption of refined fuel and crude supply chains from the Middle East due to the conflict in and around the Strait of Hormuz.
– Currency weakness: the rupee posted its worst performance in 14 years, amplifying the domestic price impact of rising global fuel costs.
Government response
To limit the immediate impact on domestic airfares, the petroleum ministry, in consultation with the civil aviation ministry, asked state-run oil marketing companies (OMCs) to stagger the pass-through of international price rises for domestic flights. The OMCs applied only a partial and staggered increase — described as 25% or roughly Rs 15 per litre — for airlines on domestic sectors. Airlines will pay the full market price for international operations.
Reactions from airlines and industry
Major carriers welcomed the government’s intervention:
– IndiGo expressed gratitude to the prime minister and relevant ministries, saying the step brings greater stability and helps keep domestic travel more affordable.
– SpiceJet’s leadership also thanked officials and said the move would help airlines navigate significant external disruptions and volatile fuel markets.
Economic and political fallout
– The record jet fuel rate has raised concerns about airlines’ profitability and the likelihood of higher airfares for consumers should surcharges be revised upward.
– Opposition leaders criticized the government’s handling of the crisis. Indian National Congress president Mallikarjun Kharge blamed the administration for mishandling strategic and economic policy and warned of the broader burden of rising costs on ordinary Indians.
Broader energy-price effects
The fuel-price shock is rippling across sectors:
– Commercial LPG (used by restaurants and hotels) was raised by Rs 195.5 on the same day, bringing the cost of a commercial cylinder to Rs 2,078.50 in New Delhi. Commercial gas prices had already been increased in March; domestic LPG saw a smaller rise in that period and was left unchanged on April 1.
– Petrochemical price volatility and supply constraints are impacting manufacturers that rely on petrochemicals, including condom producers, who warned of disrupted supply chains and potential price rises that could affect family-planning access.
Policy measures and temporary relief
– To ease broader economic pain, the government announced other temporary measures such as a one-year customs-duty relief allowing some goods produced in Special Economic Zones (SEZs) to be sold domestically without paying full import taxes. The move aims to cushion exporters, who face higher shipping costs and tariffs.
– The civil aviation ministry previously suspended an airfare price cap to allow airlines to adjust tickets in response to rising fuel costs; the recent staggering seeks to temper immediate fare shocks.
Outlook
With the Middle East conflict unresolved and currency pressures persisting, fuel-price volatility is likely to remain a major cost driver for India’s aviation sector and for industries dependent on petroleum inputs. Airlines may adjust surcharges in the coming days, and the government faces pressure to balance consumer affordability, industry viability, and fiscal considerations.