Air India and IndiGo, which together hold over 90% of India’s domestic aviation market, reportedly have decided to reduce domestic flights from June 1 for three months. The decision follows a sharp rise in Aviation Turbine Fuel (ATF) prices after the US-Iran conflict and a seasonal drop in demand after the school holiday period.

According to a report in The New Indian Express, Air India will cut up to 15 per cent of its domestic flights, while IndiGo plans to reduce between 5 per cent and 7 per cent of its services. ATF accounts for nearly 40 per cent of an airline’s operational costs, the report stated. Air India had also recently announced a reduction in its international flight operations.

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A senior Air India official told the daily that the airline operates about 3,800 flights per week, and the ATF cost for domestic flights has risen from ₹80,000 per kilolitre to over ₹1 lakh, varying by city due to different VAT rates imposed by state governments. The official added that operating flights at current ATF prices is not financially viable. On May 17, the Delhi government reduced VAT on ATF from 25 per cent to 7 per cent.

The official said Air India would not cancel any routes entirely but would reduce flights on specific sectors, the report added. Flights from Mumbai to Ahmedabad, Nagpur, Patna and Bhopal are likely to be cut. From Delhi, flights to Hyderabad, Bengaluru and Kolkata will also see reductions. The southern region will be affected as return flights on these sectors will be cancelled.

The reduction in international operations is another reason for the cutbacks. With fewer international flights, fewer passengers are expected to take domestic connecting flights to hubs like Delhi and Mumbai. The airline will not operate these flights from June 1 until the end of August, and the flights have been removed from the website to prevent bookings.

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IndiGo also plans to reduce 5 per cent to 7 per cent of its domestic flights. An airline source said that demand typically falls after the academic vacation period, leading to lower occupancy. IndiGo operates 1,950 flights daily, so even a small cut will result in many cancellations.
Delhi has reduced VAT on ATF for six months, while Maharashtra recently cut VAT from 18 per cent to 7 per cent until November 14. 

In April, IndiGo had revised its airfare structure. As per its revised slab-based fuel charge structure for domestic routes, passengers were required to pay an additional ₹275 for routes up to 500 km, while longer routes above 2,000 km had a fuel charge of ₹950 per sector. Charges for intermediate distances ranged between ₹400 and ₹800. 

Published on: May 27, 2026 8:03 AM IST