If crude stays high, Indian aviation faces margin squeeze, demand risk: Oil Analyst

Updated: May 03, 2026 10:21 IST New Delhi [India], May 3 (ANI): Abhishek Kumar, Senior Oil Analyst at Sparta Commodities, warned that sustained high crude oil prices could force Indian airlines to absorb losses, potentially leading to flight cancellations and government intervention to protect the aviation sector. Kumar explained that India's aviation sector is highly sensitive to fuel price changes due to ATF's significant share in operating costs (now 55-60% of total costs, up from 30-40% pre-war). Airlines face margin squeeze as jet fuel prices have risen faster than crude, exacerbating cost pressures. Kumar noted airlines are transitioning from absorption to adjustment phases, cutting discounts, raising fares, and reviewing weaker routes. He warned of demand risks, particularly for leisure travel and budget flyers, as rapid fare increases may deter price-sensitive passengers. The government recently reduced export duties on petroleum products, with ATF duty set at Rs 33 per litre, but airlines still face severe financial strain from elevated fuel costs.