Air India Imposes Fuel Surcharge Amid Escalating US-Israel, Iran Tensions

Air India Announces Phased Expansion in Fuel Surcharges

Air India has announced a phased expansion in fuel surcharges on both its domestic and international flights, citing the sharp rise in jet fuel prices triggered by the geopolitical tensions in the Gulf region.

The company stated that since March 2026, aviation turbine fuel (ATF) has seen a significant price jump due to supply interruptions, accounting for approximately 40% of an airline's operating costs. This development comes in the wake of the United States and Israel launching strikes on Iran, prompting Tehran to retaliate and plunging the Middle East region into a wider and renewed military confrontation.

In India, the situation is further intensified by high excise duty and Value Added Tax (VAT) on ATF in major metro cities like Delhi and Mumbai, increasing operating costs and adding significant pressure on the airline's finances.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Phased Revision of Fuel Surcharges

Air India will introduce the revised fuel surcharges in three phases, applicable to all flights, including those operated by Air India Express. The changes will take effect as follows:

• Phase I: New fuel surcharges will be applicable on all bookings made from 0001 hours IST on 12 March 2026.