The increasing US-Israel-Iran Conflict create a crisis in India’s aviation sector. Airspace closures have led to numerous flight cancellations and rerouting. While it is still early to assess the losses, the falling rupee, rising crude prices, and fewer air routes are putting unprecedented pressure on the sector.
India affected by US-Israel-Iran Conflict
The situation escalated after US and Israeli strikes killed Iran’s Supreme Leader Ayatollah Ali Khamenei on February 28. This prompted Iran to launch missiles and drones at Israel and US bases in Gulf nations. Airspaces over Iran, Iraq, the UAE, Saudi Arabia, Qatar, Bahrain, and Kuwait have closed. It affects India’s essential West Asia corridor, which handles 50% of its international traffic.
Fuel, ATF prices, crude oil prices rise due to war
Due to the US-Israel-Iran Conflict, fuel costs are rise in India. Aviation Turbine Fuel (ATF) is the largest expense for airlines, making up 30% to 40% of total costs. Crude prices are expected to rise by 11% due to the risk of a blockade of the Strait of Hormuz, despite OPEC+ promises to increase production.
ATF prices for March 2026 reached ₹96,638 per kilolitre, a 6% increase from February and far above the pre-COVID level of ₹64,715. This price is likely to rise further. A $1 per barrel increase in ATF could add ₹300 crore annually to IndiGo’s costs, according to some estimates.
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