The domestic airline industry was already under strain from the India-Pakistan conflict, Air India plane crash, and IndiGo cancellation crisis. Now the war in West Asia threatens to bleed India’s largely loss-making industry through the loss of business from the region, as well as a surge in input costs, particularly jet fuel prices.
The effect will now be visible on consumers’ pockets as IndiGo, Air India, and Akasa Air have already announced price hikes of ₹199- ₹2,300, depending on the nature of the flight. With Pakistan airspace already shut for Indian airlines, the disruption in flight routes through West Asia has increased travel time and cost.
The financial damage of such disruptions would mount quickly for Indian airlines. Kinjal Shah, senior vice president, corporate ratings at Icra Ltd, said operations to West Asia make up 15-20% of the Indian aviation industry’s revenues. “These disruptions have resulted in not just revenue loss, but also higher costs, from additional airport charges as more aircraft remain on ground, to higher fuel costs due to longer routings,” said Shah.
West Asia woes
As the war started, Iran’s attacks on nearly all its neighbouring countries brought flight operations to a halt. Flight routes to and through the UAE, Iran, Israel, and Iraq, among others, remain critically disrupted. By some estimates, over 50,000 flights have been cancelled globally and over 2,000 by Indian airlines since the beginning of the war.
The upcoming schedule of Indian airlines is also facing uncertainty, as Gulf countries account for a majority of international business. Data from the Directorate General of Civil Aviation (DGCA) shows that the core Gulf countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE—accounted for 51% of the total international passenger traffic in 2025.
A Mint analysis of the winter schedule of 3,288 international flights during 14-28 March shows that Indian airlines’ international business is facing extreme pressure. Five out of the top seven international routes include conflict-hit Dubai, Abu Dhabi, and Sharjah in the UAE, Doha in Qatar, and Jeddah in Saudi Arabia.
These alone account for 1,303 flights, or 40% of the total international flights, operated by Indian airlines. An airline-wise analysis shows smaller airlines are more exposed to these destinations. Air India Express, Akasa Air, and SpiceJet were scheduled to operate nearly 90% of their flights to and from West Asia, while the share for Air India and IndiGo was 22-51%.
Fuel fury
Since the outbreak of the war, jet fuel prices have surged dramatically, adding cost pressures on airlines’ business. Jet Fuel NWE CIF Cargoes—a European benchmark for fuel prices—nearly doubled from $800 per tonne on 27 February to $1,600 per tonne on 12 March. While Indian airline fuel prices are more closely linked to Asian jet fuel prices, the momentum signals the extreme pressures that are being felt across the globe.
An Icra analysis on the major operating costs of Indian airlines shows that fuel largely accounts for around 30-40% of total operating costs. The surge in fuel prices during the Russia-Ukraine war increased the share to nearly 45%.
The costs also further increase due to state taxes in the form of value-added tax (VAT), which is applied ad valorem. "High state taxes on aviation turbine fuel (ATF) further amplify the burden on carriers during periods of rising crude prices," said Jagannarayan Padmanabhan, senior director at Crisil Intelligence.
Extending losses?
Indian airlines, barring the market leader IndiGo, are primarily loss-making companies. Data shared in the Parliament on 11 December for the top five public and private airlines shows that the main Indian airlines (Air India, Air India Express, Akasa Air, IndiGo, and SpiceJet) made a cumulative loss of ₹4,600 crore in FY25.
This was worse in FY23 (during the Russia-Ukraine war) when airlines bled nearly ₹20,000 crore majorly due to high ATF prices and a depreciating rupee.
The current year has been full of disruptions as reflected in the quarterly earnings of listed companies. IndiGo reported a ₹2,582 crore loss in Q2 and barely ₹549 crore profit in Q3 compared to about ₹2,200-3,100 crore profit in the previous three quarters. SpiceJet has been in the loss for the past three quarters.
The current conflict has largely dashed hopes of any recovery that airlines would have planned in the March quarter, which is generally considered an economically strong quarter for companies in India. The chances of airlines bleeding more due to the West Asian crisis are high.