The Real Cost of a Flight Ticket in India: What Are You Actually Paying For?

India is one of the fastest-growing aviation markets in the world, but flying within the country often feels far more expensive than it should be. While airlines are frequently blamed for high fares, the truth lies much deeper. A large part of the cost is driven by the structure of the aviation ecosystem itself: from steep fuel taxes to heavy airport charges that no airline can escape.

ATF Accounts for Nearly 45% of Operating Costs 

Aviation Turbine Fuel (ATF) is the single largest expense for Indian airlines. It typically accounts for nearly 45% of an airline’s total operating costs. This is mainly because ATF in India is taxed heavily.

Unlike most countries, ATF is taxed heavily by state governments in India. Depending on the airport, the Value Added Tax can go as high as 29%. Since this is not a part of GST, Indian airlines cannot claim input tax credit, and the ultimate burden is passed on to the passengers.

This means that even when global oil prices fall, passengers in India rarely see a big difference in ticket prices because the tax burden keeps fuel costs high.

Airport Fees Add Another Layer of Pressure

Another major reason fares feel expensive is the cost of using airports. Modern airports in India (especially in metros) operate under a public-private partnership model. While they offer world-class infrastructure, the charges they levy on airlines are significant.

These include:

• Landing fees
• Parking charges
• User Development Fees (UDF)
• Passenger Service Fees (PSF)

Airlines pass these charges directly into the ticket price. For busy airports like Delhi and Mumbai, these fees have risen sharply over the years because of ongoing expansion and financing costs.

Other Factors That Inflate Flight Ticket Prices

While fuel and airport fees are the biggest contributors, a few other structural issues add to the cost of flight tickets:

• Leasing aircraft in dollars: Airlines pay rent in USD, so a weak rupee increases costs instantly.
• High compliance burden: From safety audits to compensation rules, Indian airlines face layers of regulation that add to operating costs.

Conclusion

Flying in India is expensive not because airlines want it to be, but because the system around them is costly. Lowering fuel taxes, rationalising airport charges, and easing long-standing regulatory burdens could make travel more affordable. Until then, airlines will continue to pass on these unavoidable expenses to passengers, and airfares will remain stubbornly high.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.