Air India's fares are set to go up as the airline on Tuesday announced a hike in fuel surcharge between Rs 399 and $50 (Rs 4,600) amid the ongoing conflict between the US-Israel coalition and Iran in West Asia. The Tata group airline announced a three-phase expansion of fuel surcharges across its domestic and international flights, including those operated by Air India Express, driven by surging aviation turbine fuel (ATF) prices due to supply disruptions in the Gulf region.
“Since early March 2026, ATF, which accounts for nearly 40% of an airline’s operating costs, has seen significant price escalation due to supply interruptions. In India, this pressure is amplified by high Excise Duty and VAT on ATF in major metro cities such as Delhi and Mumbai, magnifying cost the impact and placing substantial strain on airline operating economics,” said Air India in a statement. The average price of jet fuel in 11 months until February 2026 stood at Rs 91,173 per kiloliter (KL), but in March 2026 it increased by 6% to reach Rs 96,638 per KL.
In the first phase (new bookings from March 12), fuel surcharge for domestic and SAARC flights has been revised to Rs 399. Previously, there was no fuel surcharge on domestic flights and flights to and from the SAARC region. Similarly, in the West Asia/Middle East region, where there was no fuel surcharge, the same is revised to $10.
In Southeast Asia, the fuel surcharge has been revised to $60 (up $20 from $40 and it also applies to Singapore from this phase). For Africa, this has been revised to $90 (up $30 from $60).
In the second phase (new bookings from March 18), the fuel surcharge for Europe has been revised to $125 (up $25 from $100) and for North America and Australia, it has been revised to $200 (up $50 from $150). Air India said that phase 3 details for Far East markets (Hong Kong, Japan, South Korea) will follow soon.
Existing tickets issued before these dates remain exempt unless altered, requiring fare recalculation, said Air India. While expressing regret over the move, it attributed its action to uncontrollable factors and warned that without surcharges, some flights might face cancellation due to unviable costs.
Industry experts believe that other airlines will also start increasing airfares to address the impact of the conflict and higher fuel prices.
Jagannarayan Padmanabhan, Senior Director & Global Head, Consulting, Crisil Intelligence, said that higher fuel costs almost inevitably translate into higher ticket prices if the shock persists. He added that airlines globally have already begun raising fares or adding fuel surcharges to offset the spike in jet fuel prices, because absorbing such large increases in fuel costs is not sustainable over long periods.
“While higher fares may soften discretionary leisure travel at the margins, India’s domestic aviation market continues to grow structurally, and passenger traffic is still expected to expand albeit modestly despite the cost pressures facing airlines,” added Padmanabhan.
