The Indian aviation industry has been going through a turbulent time recently. Global conflicts, rising fuel prices, the value of the rupee, and more have obviously hit the industry and could potentially lead to an increase in plane tickets prices.
Here, we take a look at some of the reasons that could be the cause of this rise in prices for air travel.
Rising Fuel Costs And Rupee Losing Value Against Dollar
Fuel is one of the biggest expenses for airlines, besides buying and maintaining the aircraft. The aviation turbine fuel (ATF) being consistently high has led to operational costs going up, which directly affects ticket pricing. This, along with the cost of borrowing new aircraft increasing due to higher lease payments and interest rates, has made quite a dent in the Indian aviation industry.
The recent instability with the value of the rupee, compared to the dollar, is also not helping, since most of these transactions are made in the latter. So now, technically, the airlines have to pay the same dollar amount for a higher rupee amount.
Aviation expert Harsh Vardhan, speaking with ETC Bharat in a February 2025 report, said, “The Indian aviation industry suffers from high operational costs, making profitability difficult. Fuel costs in India are the highest in the world. Even when global fuel prices drop, Indian airlines do not see a similar reduction in fuel expenses. Another big challenge is the rising value of the dollar against the Indian rupee.
Almost 40% of an airline’s expenses are dollar-denominated, which includes fuel, aircraft leasing, and maintenance costs. The weakening rupee increases costs significantly, and since the industry operates on thin margins, any increase in costs directly impacts profitability.”
Air India’s Chief Commercial Officer Nipun Aggarwal was quoted in a January Financial Express report saying, “Falling rupee does put pressure on our cost structure because most of our costs, except manpower, are dollarised,” adding, “The more the rupee falls, the greater the impact on our profitability.”
In January, the Indian rupee hit a record low of 86.04 against the US dollar. Recently, the Indian rupee further weakened by 60 paise, touching 86.20 per dollar, the worst fall it’s seen in a month. This was due to rising crude oil prices after Israel’s strike on Iran.
Airport Fee Going Up
Recently, several airports across India have started to increase their User Development Fee (UDF). From May 16, 2025, Mumbai Airport’s User Development Fee was raised by the Airports Economic Regulatory Authority of India (AERA).
As per reports, the previously UDF was Rs. 120 per departing domestic passenger till August 2024. An aviation source stated that “The UDF will be levied on tickets booked on May 16 and thereafter,” and be applicable for a time period from May 16, 2025, to March 31, 2029.
For domestic passengers, those booking a flight that departs from Mumbai will be charged a UDF of Rs. 175. At the same time, those arriving in Mumbai with a fee of Rs. 75. On the international front, there is a further divide between the class booked, wherein a UDF of Rs. 615 will be levied on International departing economy class passengers.
In contrast, for International departing business class passengers, the fee is Rs. 695. Similarly, international arrivals from economy class and business class passengers will have to pay UDF of Rs. 260 and Rs. 304 respectively.
A TOI report claimed that this new hike will raise the cost of a single domestic ticket to and from Mumbai by Rs. 250, “international economy return tickets will increase by Rs 875, and for business class, the hike will be Rs 99.”
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In April 2025, Delhi’s Indira Gandhi International Airport will also increase its UDF for business-class passengers flying on international routes.
Under this new fee structure, economy class passengers departing on international flights will be charged Rs. 650 as a UDF, and business-class travellers will pay Rs. 810. Passenger arrivals will also be levied a UDF, which was earlier uncharged.
The economy class and business class passengers will be charged a fee of Rs. 275 and Rs. 45 as per a Business Standard report. These hikes are reportedly to generate revenue for infrastructure maintenance, development, increase the capacity of the runway, and build a new taxiway.
Longer Routes Due To Airspace Disruptions
The recent global conflicts and the eventual closing or blocking of certain airspace routes are also expected to lead to airlines increasing ticket prices to compensate for the longer routes they will have to take.
The recent Israel-Iran conflict has led to a rise in the price of crude oil globally, and the India-Pakistan conflict in the aftermath of the Pahalgam terror attack also had an impact on airlines and the routes they could take.
In the wake of the India and Pakistan crisis, airspace for Indian flights was temporarily closed. This eventually led to flights having to take a longer route, resulting in more fuel being spent, increased operational costs, and also created payload challenges, and longer times to reach the destination.
Image Credits: Google Images
Sources: Business Standard, The Economic Times, ETV Bharat
Find the blogger: @chirali_08
This post is tagged under: Plane Tickets, Plane Tickets india, Plane Tickets Expensive, airfare, airline tickets, airline tickets india, airline tickets india expensive, air india crash, airport fee
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