Air India, IndiGo plan domestic flight cuts as West Asia crisis fuels ATF surge

After multiple cuts in their international flights, India’s two leading airlines, Air India and IndiGo, have decided to reduce a significant number of domestic flights amid the rising cost of aviation turbine fuel (ATF) due to the West Asia crisis.

As per reports, Air India is planning to reduce up to 15% of its domestic operations, while IndiGo is mulling cuts of between 5% and 7% in its flights.

The rising fuel cost, with global Brent crude prices hovering around $100 per barrel amid supply concerns, is one of the key reasons behind the move. ATF makes up nearly 40% of an airline’s operating expenses. Air India had also recently announced cuts in its international flight operations.

On May 17, the Delhi government reduced VAT on aviation turbine fuel (ATF) from 25% to 7%.

Flights likely to see cuts include services from Mumbai to Ahmedabad, Nagpur, Patna, and Bhopal. From Delhi, airlines are also expected to reduce frequencies on routes to Hyderabad, Bengaluru, and Kolkata.

While Delhi’s VAT reduction will remain in effect for six months, the Maharashtra government also last week cut VAT on ATF from 18% to 7% until November 14.

In a bid to support the struggling aviation sector, the Centre on April 1, 2026, capped any increase in ATF prices for domestic airlines at 25% to shield operators from global volatility. It also lowered parking charges for airlines, mainly focusing on reducing non-fuel operating costs at a time when ATF prices were surging.

The Indian aviation sector has been facing mounting pressure over the past few months due to elevated crude oil prices, supply chain disruptions, and geopolitical tensions in West Asia. Industry analysts say airlines are increasingly focusing on route rationalisation and cost optimisation to protect margins while maintaining passenger demand in a highly competitive market.