A global energy shock triggered by escalating tensions in West Asia and the closure of the Strait of Hormuz has sent aviation turbine fuel (ATF) prices in India into uncharted territory, breaching Rs 2 lakh per kilolitre for the first time. Yet, in a calibrated intervention, the Centre has stepped in to prevent a direct pass-through of the surge to domestic airfares, effectively cushioning millions of flyers and a financially stretched aviation sector from a full-blown fare surge.ATF prices for certain segments jumped 114.5 per cent in a single revision, with rates in Delhi touching Rs 2,07,341.22 per kilolitre, nearly double last month’s Rs 96,638.14 and well above the previous peak of around Rs 1.1 lakh seen during the 2022 oil shock following the Russia-Ukraine conflict.However, the impact is not uniform across the sector, and that distinction is critical.Indian Oil Corporation said that the steep hike applies primarily to non-scheduled operators, including private jets, charters and ad-hoc flights. For these operators, fuel costs have risen by up to 115 per cent for domestic operations and over 100 per cent for international routes, exceeding $1,000 per kilolitre for the first time in India.Scheduled commercial airlines, which carry the bulk of India’s passenger traffic, have been largely shielded.The Ministry of Petroleum and Natural Gas said that while international benchmarks warranted a more than 100 per cent increase, public sector oil companies, in consultation with the Ministry of Civil Aviation, implemented only a 25 per cent rise, roughly Rs 15 per litre, for domestic carriers. The remainder of the cost has been deferred or shifted.The reasoning is strategic. ATF accounts for 40-45 per cent of an airline’s operating costs in India, among the highest globally. A full pass-through of global prices would have pushed already fragile balance sheets into deeper stress and triggered sharp ticket price spikes, especially after fare caps were lifted last month.The aviation sector’s current financial structure makes it particularly vulnerable. With only one consistently profitable airline and others reliant on promoter backing, a sudden doubling of fuel costs could have rendered operations unviable. Airlines had already begun adjusting, with fuel surcharges ranging between Rs 150 and $200 introduced or revised in March.Civil Aviation Minister Ram Mohan Naidu Kinjarapu described the move as a “calibrated response to an extraordinary global crisis,” stating that the staggered increase would help stabilise airfares, maintain connectivity, and ensure uninterrupted cargo movement. Industry leaders echoed the sentiment, calling the intervention timely amid severe volatility in fuel markets.“The Government’s decision to allow only a partial increase in Aviation Turbine Fuel prices comes as a significant relief for the Indian aviation industry amid unprecedented global uncertainty. We sincerely thank the Hon’ble Union Minister of Civil Aviation, Ram Mohan Naidu Kinjarapu, and the Hon’ble Secretary, Ministry of Civil Aviation, Samir Sinha, for their leadership and proactive intervention in securing a moderated adjustment to ATF prices. Their timely intervention will go a long way in helping airlines navigate one of the most challenging global crises in recent times, marked by severe external disruptions and volatility in fuel markets. The Government has, time and again, demonstrated strong and reassuring leadership, steering Indian aviation through global headwinds with clarity and resolve. This decision once again reinforces that commitment,” said Ajay Singh, Chairman and Managing Director, SpiceJet.IndiGo spokesperson said that the ongoing geopolitical situation in the Middle East has significantly affected global supply of Aviation Turbine Fuel (ATF) resulting in continuous and steep increase in its prices. “We would like to thank our government for materially insulating the domestic air travel costs fromthe substantial increase in ATF prices and passing on partial and staggered increase of 25%. IndiGo is reviewing the impact of this revised ATF price on 1st April 2026 on its operating cost and will appropriately announce its revised Fuel Charges shortly,” said the airline.Yet, the relief is selective. International carriers refuelling in India and high-end private aviation will bear the full brunt of the surge. This dual pricing mechanism reflects a clear policy choice, prioritising mass mobility and economic continuity over premium travel segments.The development also brings back into focus India’s long-standing structural issue with ATF pricing. Despite deregulation in 2001, fuel remains heavily taxed and uneven across the country, creating sharp cost disparities for airlines depending on where they refuel.ATF attracts a central excise duty of 11 per cent, while state governments impose value added tax (VAT) that ranges widely from as low as 0 per cent to as high as 29 per cent. This means airlines often strategically plan fuel uplift at airports where taxes are lower to manage costs.States such as Delhi and Maharashtra have historically imposed higher VAT rates, making fuel significantly more expensive at key metro hubs like Delhi and Mumbai. In contrast, several states and Union Territories, particularly those seeking to boost regional connectivity, have slashed VAT to near zero levels under the Regional Connectivity Scheme (RCS), where central excise is also reduced to 2 per cent.While the Ministry of Civil Aviation has persuaded over 20 states and UTs to cut VAT in recent years, the absence of ATF under the Goods and Services Tax (GST) regime continues to fragment pricing. Any move to bring ATF under GST would require consensus in the GST Council, where states remain wary of revenue losses.This structural imbalance means that even without global shocks, ATF prices in India remain among the highest in the world, a long-standing concern for airlines.The latest spike marks the second consecutive monthly increase, following a 5.7 per cent rise in March. But unlike routine revisions, this one underscores the vulnerability of India’s aviation sector to global geopolitical shocks and the extent to which policy intervention remains necessary to manage their fallout.For now, passengers may not see an immediate surge in ticket prices. But the underlying pressure has not disappeared, it has merely been deferred. Airlines are reviewing their cost structures and could recalibrate fuel surcharges in the coming weeks. The skies may look stable for now, but the turbulence has not passed.