India’s largest airline IndiGo and full-service carrier Air India have approached the government seeking relief from certain aviation taxes and charges as operating costs rise. News reports suggest that the request comes as airlines face disruptions to flight routes linked to the ongoing conflict involving Iran.
The airlines have asked the government to review aviation-related taxes and certain airport charges. The request focuses mainly on costs that directly affect international operations.
IndiGo has sought relief on aviation turbine fuel (ATF) taxes, which form a major part of airline expenses. Fuel typically accounts for 30-40% of an airline’s operating costs.
In India, ATF is subject to a central tax of around 11%, while state-level taxes can reach as high as 29%. Airlines have argued that the tax structure increases costs compared with several other aviation markets.
Lower fuel taxes could reduce operating expenses, particularly at a time when airlines are already facing longer international flight routes.
The conflict in the Middle East has made parts of the region’s airspace difficult to use for commercial airlines. At the same time, Indian carriers remain restricted from using Pakistan’s airspace due to diplomatic tensions.
As a result, airlines have had to change some flight paths. IndiGo has been operating certain UK services via Africa, while Air India has added technical stops on some North America flights.
These changes increase flight time, fuel consumption and operational costs.
Apart from fuel taxes, airlines have also raised concerns over charges at privately operated airports. According to the reports, the carriers have asked the government to review passenger-related fees and other charges.
They have said that some of these fees are higher than those charged at government-run airports.
Data from aviation analytics firm Cirium shows that 64% of the 1,230 scheduled flights operated by the 2 airlines to the Middle East, Europe and North America did not operate between February 28 and March 9.
IndiGo held 63.6% of the domestic market in January, while the Air India Group accounted for 26.5%.
Air India has estimated that the ban on using Pakistan’s airspace could lead to annual losses of about $600 million. The airline reported a loss of $433 million last year after returning to Tata Group ownership in 2022. The airline has also asked the government to reduce the tax on premium economy tickets to 5% from 18%.
Read More: Government Invokes Essential Commodities Act to Prioritise Gas Supply Amid West Asia Crisis!
As of March 13, 2026, 3:30 pm, Interglobe Aviation Ltd (Indigo) share price closed at ₹4,162.00, a 2.11% decrease from the previous closing price.
Airspace restrictions and longer flight routes have increased operating costs for Indian airlines. Carriers have sought relief on fuel taxes and airport charges as they adjust to the current operating conditions.
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.
Published on: Mar 14, 2026, 10:45 AM IST
Team Angel One
We're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
EN