Airline Ticket Prices To Hike Ahead? Jet Fuel Prices Increased By 5.5%; Indigo, SpiceJet Stocks Crash

The oil marketing companies have increased jet fuel prices by nearly 5.5% for September 2026, raising questions on whether the impact will be passed by Indian airlines to customers in the form of higher ticket prices. There are only two major airlines listed on Indian stock exchanges, and both witnessed a sharp decline on Tuesday. Indigo and SpiceJet are down by 1-2%. Whether airline fares rise ahead due to the latest hike in aviation turbine fuel (ATF) will be keenly watched.

Jet Fuel Prices Hike In September 2026

The price of jet fuel or ATF is increased by Rs 6.28 per litre or 5.46% to Rs 121.28 for domestic airlines with effect from September 6, 2026.

This is the second consecutive monthly hikes in ATF prices. Earlier, on August 1, jet fuel prices were increased by Rs 5 per litre to Rs 115 from the earlier Rs 110 per litre. In July, jet fuel prices were trimmed by Rs 5 per litre.

The new prices are part of the government's "price stabilization" scheme.

Following the West Asia crisis that has impacted the aviation industry heavily, the government rolled out "Price Stabilization Fund" for scheduled domestic airlines in regard to ATF pricing. An allocation of Rs 10,000 crore is announced for the scheme.

Under the scheme, support will be given to OMCs to facilitate stable ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis. Also, the corpus shall compensate OMCs for losses arising from elevated international ATF prices whenever the prevailing import parity price exceeds the benchmark price determined under the approved mechanism.

This is a voluntary scheme that allows airlines to lock their fuel rates for up to 3 years. Those carriers who did not opt for the scheme will continue to buy fuel at the market-linked prices.

Will Airline Ticket Prices Rise?

Generally, jet fuel accounts for 35-40% of operational costs for Indian airlines. Every time the ATF price is hiked, fuel becomes expensive for them to buy, and that increases their overall costs. To reduce the burden, airlines generally pass on the impact to customers or choose various mediums such as raising flights' base fares, increasing fuel-related surcharges or fees, reducing discounts and promotional fares, or hiking flight ticket prices on routes where demands are high.

In their 2026 outlook report dated June 7, 2026, IATA revealed that Middle East disruptions and high ATF prices could halve the airline industry's profitability.

"War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse. Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%. All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year's level. Smaller carriers that started the year with weak balance sheets are certainly struggling. At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East. The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war. These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable," said Willie Walsh, IATA's Director General.

Walsh added, "Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines. Net profit per passenger is expected to fall to $4.50, half of what it was last year. Under the circumstances, that shows resilience. But it won't even buy you a hot dog at most of the FIFA World Cup venues and it does not leave much of buffer should other costs or taxes start rising."

International crude oil prices is one of the major components that is considered for deciding ATF prices. Currently, both US WTI crude and Brent crude are up by 1% each to trade around $87 per barrel and $91.3 per barrel. As long as crude oil prices remain elevated, the impact on airlines will persist.

The July-September quarterly result will reveal the impact of renewed tensions between US and Iran. For now, aviation stocks are bleeding on September 1, 2026.

Aviation Stocks Fall

At the time of writing, Interglobe Aviation (Indigo) stock price dropped by Rs 112 or 2.2% to trade around Rs 5072 apiece on BSE, with market cap of Rs 1,96,117.30 crore. Meantime, SpiceJet slipped by 1.3% to trade around Rs 10.19 apiece with market cap of Rs 1,555.10 crore.

Indigo is the largest domestic airline with market share over 66%, followed by Air India with nearly 24% share and Akasa Air with around 6.4% share. SpiceJet holds nearly 2% market share.

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