Is the Indian aerospace industry about to go bankrupt ?

Indian aviation is experiencing one of the most severe periods of turbulence in its modern history, as industry giants sound the alarm about an imminent threat of financial collapse.

In an unprecedentedly serious letter addressed to the Ministry of Civil Aviation on Sunday, April 26, 2026, the Federation of Indian Airlines—representing major carriers such as Air India, IndiGo, and SpiceJet—warned that the sector is now “on the brink of closure or cessation of operations.”

This systemic crisis is exacerbated by the escalation of the conflict in Iran, which not only drastically reduces global energy supplies but also necessitates costly longer flight routes to bypass war zones, thus mechanically increasing kerosene consumption.

India, whose economy is 88% dependent on crude oil imports, finds itself trapped by soaring international prices, while aviation turbine fuel (ATF) alone accounts for nearly 40% of carriers’ operating costs.

Faced with this « double whammy » of supply and profitability, the Federation is demanding emergency government intervention, calling for the reinstatement of price caps on kerosene—a measure already tested during the Covid-19 pandemic—as well as a massive reduction or deferral of airport and other taxes.

Without immediate structural support from the New Delhi government, the risk is that the world’s third-largest civil aviation market will grind to a halt, jeopardizing the connectivity of a country where air transport has become the essential engine of economic growth.