After warnings of a "shutdown," Air India has suspended international flights across 30 routes due to record-high jet fuel prices and certain airspace closures caused by the US-Iran war. According to peektv_in, this dramatic action comes two weeks after major Indian airlines sent an SOS to the government, seeking intervention. The government has not responded to their appeal yet, leaving airlines to take unilateral action to manage the crisis. The suspension represents a significant escalation from the 29 international routes that Air India had announced it would suspend or reduce frequencies on between June and August 2026.
Indian aviation is experiencing what industry experts describe as a perfect storm of challenges in May 2026. According to reports from EY India, the sector is grappling with a mix of economic and geopolitical pressures that has created a cycle of challenges feeding into itself. The crisis began in 2019 with the Covid pandemic and has since been compounded by engine failures, airspace restrictions, operational disruptions, deadly crashes, and the Middle East fuel shock. As reported by EY India, Indian airlines are already facing ₹12-18 crore in additional monthly costs, with ATF now accounting for 55-60% of operating expenses, up from ~40%.
The Middle East war and fuel shock has significantly impacted Indian aviation operations. According to EY India, airspace restrictions are forcing rerouting, adding 35-70 minutes per flight and increasing fuel burn by 1.3-1.9 tonnes per flight. With the Middle East handling approximately 10% of global passenger traffic, these disruptions are weakening India's international connectivity. The crisis began after US-Israel strikes on Iran on February 28, which sent crude prices soaring and made fuel, which already makes up 30-40% of operating costs, far more expensive. As reported by EY India, ATF prices rose 5.7% in March, while Brent crude jumped from $72 to $105 per barrel.
Airlines have begun directly passing on rising ATF costs to passengers through fuel surcharges. As reported by EY India, IndiGo has introduced fuel surcharges ranging from ₹425 to ₹2,300 on domestic and international tickets, while Air India and Air India Express have added a ₹399 fuel surcharge on domestic tickets from March 12. Akasa Air has introduced fuel surcharges ranging from ₹199 to ₹1,300 on domestic and international flights. These surcharges reflect the increased operational costs airlines are facing due to the Middle East crisis and rising fuel prices.
The crisis is expected to have lasting impacts on India's aviation sector. According to ICRA, India's aviation losses are expected to widen to ₹17,000-18,000 crore in FY2026, with its outlook downgraded from stable to negative. As reported by EY India, flight operations may stabilise within weeks, but financial recovery could take one to three quarters. The crisis is accelerating a strategic reset towards more resilient direct routes, diversified hubs, and flexible aviation networks. With the right policy backing and infrastructure push, India could reduce its reliance on Gulf hubs and emerge stronger as a global aviation hub, according to EY India.
