ATF Pinch: Air India, IndiGo Set to Trim Domestic Operations from June

Air India and IndiGo are set to cut domestic flight operations, starting from June 1 for a period of 90 days, as airlines struggle with sharply rising Aviation Turbine Fuel (ATF) prices and weak summer demand, The New Indian Express reported.

Air India will reduce up to 15% of its domestic operations, while IndiGo plans to cut between 5% and 7% of its services.

The Fuel Cost Crunch

ATF accounts for nearly 40% of an airline's operational costs, making it the single biggest expense item for carriers.

A senior Air India source told TNIE, "We operate an average of 3,800 flights per week. The ATF cost for our domestic flights used to be ₹80,000 per kilolitre. It has now risen to more than ₹1 lakh, depending on the city, as VAT imposed by state governments varies. It would not be financially viable to operate when ATF prices are this high."

To address the burden on airlines, the Delhi government on May 17 reduced VAT on ATF from 25% to 7%. The Maharashtra government also cut VAT on ATF from 18% to 7% last week, a relief valid until November 14.

At the central level, the government on April 1, 2026 capped any ATF price increase for domestic operators at 25%, and also reduced parking fees while introducing an Emergency Credit Scheme for airlines.

Which Routes Will Be Affected

Air India will reportedly not withdraw any route entirely but will reduce the frequency of flights on specific sectors. Flights likely to be cut include services from Mumbai to Ahmedabad, Nagpur, Patna and Bhopal. From Delhi, flights to Hyderabad, Bengaluru and Kolkata will also see reductions. While a major share of the cuts will come from Mumbai and Delhi, the southern region will be affected too, as return flights on impacted sectors will also be cancelled.

The airline has already removed the affected flights from its booking website to prevent passengers from reserving seats on those services, according to the report.

Air India had also recently announced a reduction in its international operations, which is another factor driving the domestic cuts, with fewer international arrivals, the number of passengers taking connecting domestic flights to hubs like Delhi and Mumbai is expected to fall.

IndiGo Follows Suit

IndiGo, which operates around 1,950 flights daily, reportedly said it would reduce between 5% and 7% of its domestic operations from June 1. The airline pointed to seasonally lower demand as a key reason, the months following the academic vacation period typically see weaker occupancy.

Even a small percentage reduction at IndiGo's scale translates into a significant number of daily cancellations.

This comes after aviation analytics firm, Cirium, earlier reported that Indian carriers are scheduled to operate 7% fewer domestic weekly flights year-on-year (YoY) in June 2026, with services declining from 22,220 to 20,670.