Air India raises fares as Iran war drives jet fuel surge

Air travel is set to become costlier after Air India announced a phased fuel surcharge on both domestic and international routes, citing a sharp spike in jet fuel prices triggered by supply disruptions linked to the Iran war.

The surcharge will also apply to flights operated by Air India Express, the airline said, as aviation turbine fuel (ATF) costs surge across the region.

According to the airline, the move follows a steep rise in ATF prices since early March 2026, driven by geopolitical tensions and supply disruptions in the Gulf — a key hub for global oil and fuel supplies.

Phased rollout of fuel surcharge

The airline said the surcharge will be implemented in multiple stages across routes.

Phase 1: Domestic flights and routes to countries in the South Asian Association for Regional Cooperation (SAARC) — Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka — will see fares rise by ₹399 per ticket.

Phase 2: Additional surcharges will be introduced on several international routes:

• West Asia: $10 per ticket
• South East Asia: $20 per ticket
• Africa: $30 per ticket

Phase 3: The surcharge will later extend to Far East destinations including Hong Kong, Japan and South Korea, with detailed pricing to be announced later.

Air India said Phase 1 and Phase 2 are currently being rolled out, while Phase 3 will follow depending on market conditions.

Fuel costs pressure airline operations

The airline noted that aviation turbine fuel typically accounts for nearly 40% of an airline’s operating costs, making carriers highly vulnerable to fluctuations in fuel prices.

Since early March, ATF prices have climbed sharply as tensions and supply disruptions in the Gulf region disrupted fuel markets, significantly increasing operating expenses for airlines.

The impact is particularly pronounced in India, where ATF is subject to high excise duties and state-level VAT, especially in major aviation hubs such as Delhi and Mumbai, further raising cost pressures on carriers.

Existing bookings remain unaffected

Air India clarified that tickets issued before the surcharge takes effect will not be affected, unless passengers change their travel dates or itineraries, which would require the fare to be recalculated.

The airline said the surcharge is necessary to sustain operations in the face of rising fuel costs.

“Absent such fuel surcharges, it is likely that some flights would be unable to cover operating costs and would have to be cancelled,” the airline said.

The carrier added that the surcharge will be reviewed periodically, with adjustments made depending on changes in fuel prices and the evolving geopolitical situation.

It also noted that Air India Express currently does not levy fuel surcharges on its flights, although the broader surcharge announcement covers services operated by the airline as well.