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The ongoing West Asia crisis is beginning to impact aviation economics, with airlines now facing rising war-risk insurance costs. The conflict is not only disrupting global energy markets but also increasing the cost of operating flights in sensitive airspaces, as insurers move to price in elevated geopolitical risks.
On the question of whether war-risk insurance has gone up post the West-Asia crisis, an airline industry source told ANI that "Previously, Indian carriers did not have dedicated war risk insurance coverage. However, due to the ongoing Iran-Israel conflict, insurers have introduced war risk premiums for flights operating in the affected region". The source went on to mention that "Currently, the additional war risk premium stands at approximately Rs 30,00,000 per round trip for a narrow-body aircraft and Rs 90,00,000 per round trip for a wide-body aircraft". The additional insurance burden comes at a time when airlines are already grappling with a sharp surge in fuel costs. Indian carriers have begun revising fuel surcharges across both domestic and international routes to offset the impact. IndiGo, India's largest domestic carrier, has revised its fuel charges for both domestic and international routes, effective for all new bookings made after 0001 hours on April 2, 2026. The airline said the move was driven by a steep increase in aviation turbine fuel (ATF) prices, which has significantly raised operating costs across its network. The airline noted that the International Air Transport Association's (IATA) Jet Fuel Monitor indicated an increase of over 130 per cent in fuel prices in the region on a month-on-month basis. In response to these conditions, the Ministry of Petroleum and Natural Gas and the Ministry of Civil Aviation have allowed only a partial and staggered increase of 25 per cent in ATF prices for domestic operations, helping limit the immediate burden on passengers. "IndiGo is thankful to the Government for timely intervention, without which April 2026 fuel cost increases would have severely impacted affordability of domestic air travel," the airline said in a statement. Under the revised domestic structure, fuel charges have been linked to travel distance. Flights covering 0 to 500 kilometers now attract a charge of Rs 275, while routes between 501 and 1,000 kilometers are priced at Rs 400. Charges rise to Rs 600 for distances between 1,001 and 1,500 kilometers, Rs 800 for 1,501 to 2,000 kilometers, and Rs 950 for flights exceeding 2,000 kilometers. "For International Operations, ATF prices have more than doubled in the last month, consequentially driving a significant impact on the airline's operating costs on these routes," IndiGo said. Air India has also moved in a similar direction. On March 10, the airline announced a phased expansion of fuel surcharges across domestic and international routes, citing a sharp increase in jet fuel prices linked to the geopolitical situation in the Gulf region. In a statement, the airline said aviation turbine fuel (ATF), which accounts for nearly 40 per cent of an airline's operating costs, has witnessed a significant price escalation since early March 2026 due to supply interruptions. Alongside high fuel prices, airlines are now facing fresh cost pressures that could impact earnings. (ANI)
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