NEW DELHI: India’s leading airlines, which together control more than 90% of the domestic aviation market, have decided to scale down their domestic operations from June 1 for a period of three months. Multiple sources cited the sharp rise in Aviation Turbine Fuel (ATF) prices following the outbreak of the US-Iran war, along with the seasonal slump after the school holiday period, as the key reasons behind the move.
Air India will reduce up to 15% of its domestic operations, while IndiGo plans to cut between 5% and 7% of its services.
ATF accounts for nearly 40% of an airline’s operational costs. Air India had recently announced a reduction in its international flight operations as well.
A senior source at Air India said, “We operate an average of 3,800 flights per week. The ATF cost for our domestic flights used to be Rs 80,000 per kilolitre. It has now risen to more than Rs 1 lakh, depending on the city, as VAT imposed by state governments varies. It would not be financially viable to operate when ATF prices are this high.”
On May 17, the Delhi government announced a reduction in VAT on ATF from 25% to 7%.
The source added, “We will not withdraw any route entirely, but we will reduce the number of flights operated on specific sectors. There is a long list of services that we plan to scale down.”
Among the flights likely to be reduced are services from Mumbai to Ahmedabad, Nagpur, Patna and Bhopal. From Delhi, the number of flights to Hyderabad, Bengaluru and Kolkata will also be cut, the source said. “While a major portion of the reductions will be from Mumbai and Delhi airports, the southern region will also be affected, as return flights on these sectors will likewise be cancelled,” he added.
Another reason for the reduction is the scaling back of international operations. “With the international network currently reduced, the number of passengers taking domestic connecting flights to hubs such as Delhi and Mumbai is also expected to decline. Anticipated lower demand is another factor,” the source said.
“We will not operate these flights from June 1 until the end of August. The flights have already been removed from the website to prevent passengers from booking them,” the source added.
IndiGo, meanwhile, said it would reduce between 5% and 7% of its domestic operations. “Historically, the months following the academic vacation period witness lower occupancy levels. Due to the expected fall in demand, we will scale down operations from June 1. IndiGo operates 1,950 flights daily, so even a small percentage cut translates into a significant number of cancellations,” an airline source said.
While Delhi has reduced VAT for a six-month period, the Maharashtra government last week reduced VAT on ATF from 18% to 7% until November 14.
To support the struggling aviation industry, the Central government on April 1, 2026 capped any increase in ATF prices for domestic operators at 25% to cushion the impact of global instability. It also reduced parking fees and introduced an Emergency Credit Scheme for airlines.
