We may be seeing the start of a shift in airfares. The Centre is mulling over a rollback of surcharges, but only if they can be sure of some long-term stability in the fuel market. With Brent crude sitting at $72 a barrel and an ATF review coming up on 1 July 2026, all eyes are on whether the airlines will be put on the spot to trim their fees.
Minister puts out feelers for relief
“If we see fuel prices hold for any length of time, we may tell the airlines to have another look at their surge and other charges,” says Naidu. His office has been in a running conversation with the carriers to get a read on whether the drop in ATF is here to stay.
He has pointed to the last four months as a trying time for the industry because of the way prices have been all over the place. Any step on fares will come after we’re sure the waters have calmed down. “We are watching, not in a hurry to make up our minds,” he told reporters.
The minister was clear on where the government stands:
– We are on top of ATF pricing
– Our call will be based on what happens in the longer run
– The line of communication with the airlines is open
– We want to see some of those add-ons and surges go away
How we got here
You can put it down to the fact that Brent was at $72/barrel on Thursday, having taken a 4% hit the day before. It’s back to where it was before the US-Iran row. Before that, you had the West Asia situation throwing a wrench in supply and driving up the cost of ATF.
In India, we do a price check on ATF every two weeks, in step with the world. The next one is set for 1 July 2026. In the thick of things, the government did what it could: capping ATF for scheduled domestic operators, chipping in on airport levies and making the Emergency Credit Linkage Scheme available.
Then there is the Rs 10,000 crore fund for price stabilisation. The minister made a point of it – it shows just how much we are focused on not letting costs in the sector get out of hand.
Home and abroad don’t always see eye to eye
When the supply shock hit, the approach was different for home and overseas. On International Flights, the market price was hiked some 115 per cent, or 2.5 times over, in line with what was happening globally.
Domestically, we had the Rs 10,000-crore pot to fall back on. That allowed us to keep the increase for our own airlines to around 10 per cent in the last round of revisions. It was a way to keep a lid on fares while the rest of the world was in the red.
So when you have a dip in input costs like now, it puts a bit of a squeeze on the airlines to rework their surcharges, particularly on the home front. But it all comes down to whether the lower ATF is going to be with us for good.
Oil is down, but there are caveats
Oil is back to pre-war with Iran levels, but a report from McKinsey tells a slightly different story. They say you could be looking at 25% higher ticket prices, with jet fuel and refinery problems being the reason.
The minister is treading carefully. He is fine with the ATF numbers coming in, but wants to be sure of it first. Meanwhile, in the markets, InterGlobe Aviation (IndiGo) saw its stock go up 4.49% on the off-chance of cheaper fuel.
What this means for you and the competition
Assuming the status quo holds and the surcharges are done away with, you can expect the big and small players to be hard-pressed to give some of that back to the customer. The domestic side is where you’ll likely see the first moves.
Don’t count on the same for international, where the price has been propped up and the supply side is still a bit of a mystery.
**1 July 2026 and beyond
For the investor and the person with a trip in mind, 1 July 2026 is the marker. As the bi-weekly reviews wind down to that date, any word from the top will be tied to where ATF is heading and what the government has to say about the extras on your bill.
Keep an eye on these in the near term:
– Is Brent holding at $72?
– How does ATF shape up over a couple of cycles?
– What are the airlines doing with their policies?
In the end, the door is open for some of those ticket mark-ups to be removed, as long as the fuel doesn’t start to act up again. The next few reviews will tell us if we actually see it in the fare box.
