UAE - India airfares set to rise further as jet fuel crisis deepens

Dubai: Airfares for Indian expats in the UAE and wider Gulf are likely to rise as fuel costs surge, with airlines warning of knock-on disruptions in the weeks ahead.

Travellers could also face reduced flight frequencies if Indian carriers cut capacity, as well as less flexibility when booking during peak periods.

India has held jet fuel prices steady for domestic flights while sharply increasing rates for international operations, offering limited relief to airlines already warning of a potential shutdown.

State-run Indian Oil Corporation, which sets benchmark fuel prices, said on its website it would keep domestic aviation turbine fuel (ATF) unchanged at about INR 104,927 (Dh4,060, as per current rates) per kilolitre.

However, prices for international routes have been raised to roughly INR 1,42,425.40 (Dh5,530) per kilolitre, reflecting rising global costs, Bloomberg has reported.

The move comes as airlines worldwide face a jet fuel crunch driven by the Middle East conflict and supply disruptions through the Strait of Hormuz. Oil prices have surged, with Brent crude rising to about $111 a barrel on Friday — up sharply from around $65 before the conflict escalated — amid stalled efforts to resolve the war.

Airlines warn of shutdown risk

Indian carriers say the situation has reached a breaking point.

“The airline industry in India is under extreme stress and on the verge of closing down or stopping operations,” the Federation of Indian Airlines said in a letter to the government.

The body, which represents major carriers including Air India, IndiGo and SpiceJet, warned that any further increase in fuel prices could lead to aircraft being grounded and flights being cancelled.

Fuel accounts for up to 40 per cent of an airline’s operating costs, making the sector highly vulnerable to price shocks.

Relief at home, pressure abroad

By holding domestic fuel prices steady, the government has offered some breathing space for local routes, where demand is more price sensitive.

However, the increase in international fuel costs is likely to put further pressure on long-haul operations — a key segment for Indian expatriates travelling to and from the Gulf.

Airlines operating overseas routes are already facing higher expenses due to a weaker rupee, which increases dollar-denominated costs such as aircraft leases and airport charges.

Why fuel is so expensive in India

Despite producing enough jet fuel domestically, India prices ATF at import parity — effectively treating it as if it were imported from the Gulf.

This means airlines pay for notional freight, insurance, and customs duties, making fuel significantly more expensive than at hubs such as Dubai, Singapore, and Kuala Lumpur.

However, authorities have taken some steps to ease the burden.

India has capped monthly fuel price increases at 25 per cent and temporarily reduced airport charges. It has also cut export taxes on jet fuel for early May to improve supply availability.

But airlines are pushing for more support, including a return to pandemic-era cost caps and tax relief.