India approves $1 billion relief package for airlines as fuel price surge amid Iran war

India on Wednesday approved a $1 billion relief package for airlines to help offset the impact of rising aviation fuel prices caused by the Iran war. The conflict has disrupted the oil-rich Middle East and affected the Strait of Hormuz, a key route through which one-fifth of the global oil usually passes, sending up aviation turbine fuel (ATF) costs.

The surge in fuel prices has raised concerns about airline profitability and pushed airfares higher. Under the one-time measure, the government will provide interest-free advances to state-owned oil marketing companies to help stabilise ATF prices for airlines operating both domestic and international flights.

"The measure will help protect and sustain domestic and international air connectivity, ensuring continuity of air services," it said in a statement. Government data indicated that ATF prices have more than doubled since March, rising from 60.50 rupees ($0.63) per litre to 142 rupees ($1.49) in May.

Fuel accounts for nearly 40 per cent of the operating costs of the airline, and spiralling costs pile pressure on margins. Oil minister Hardeep Puri stated that the fund would protect 7.7 million jobs dependent on the aviation ecosystem. It would also "safeguard substantial public investment in airport infrastructure by keeping airline operations viable," he said in a post on social media X.