IndiGo shares, operator of InterGlobe Aviation, will be in focus on Wednesday after state-owned fuel retailers increased aviation turbine fuel (ATF) prices by about 10% while introducing a price stabilisation mechanism that allows domestic airlines to lock in fuel rates for up to three years.
Jet fuel for domestic carriers will now be priced at Rs 115 per litre, compared with Rs 104.927 earlier. Airlines that choose to join the government-backed price stabilisation scheme will be able to secure this rate for as long as three years. Carriers that stay outside the scheme will continue to purchase fuel at market-linked rates, which are currently around Rs 142 per litre, similar to the prices paid by international airlines.
While the initiative is aimed at protecting airlines and passengers from sharp fluctuations in global crude oil prices, it is expected to increase operating costs for airlines, with fuel being one of the largest components of their expenditure.
Under the scheme, participating airlines will continue to receive ATF at Rs 115 per litre regardless of movements in global fuel benchmarks. Airlines that do not opt in will benefit when prices decline but will also be exposed to higher costs when international fuel rates rise.
The scheme is based on a fixed free-on-board (FOB) benchmark price of Rs 86.32 per litre. After accounting for airport charges, oil company margins and applicable taxes, the effective selling price works out to Rs 115 per litre in Delhi, Rs 114.5 per litre in Mumbai and Rs 139 per litre in Chennai.
This comes as India’s largest airline by market share grapples with an already complex environment amid West Asia tensions. Last week, it suspended flights to six international destinations as part of a network optimisation exercise, citing a traditionally softer demand environment in the upcoming quarter and a challenging cost landscape.
A week earlier it halted flights to and from Manchester from August 31, as prolonged airspace restrictions and rising operational expenses continue to weigh on long-haul services.
The airline reported a net loss of Rs 2,536 crore for the fourth quarter of FY26, compared with a net profit of Rs 3,067 crore in the corresponding period last year. Revenue from operations, however, edged up 1% year-on-year to Rs 22,438 crore.
The airline said its operational performance during the quarter was affected by disruptions linked to the ongoing conflict in the Middle East. Capacity, measured in available seat kilometres (ASKs), increased 3.4% year-on-year to 43.6 billion.
IndiGo shares are down 11% in 2026 and about 20% in the last one year.
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