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FuelPrices

Rio De Janeiro, Brazil: The International Air Transport Association (IATA) has sharply reduced its outlook for global airline profitability in 2026, warning that soaring fuel costs linked to the ongoing conflict in the Middle East are eroding earnings across the aviation sector despite continued strength in passenger demand. Speaking at the IATA Annual General Meeting and World Air Transport Summit in Rio de Janeiro, industry leaders said global airlines are now expected to generate a combined net profit of approximately US$23 billion in 2026, down from the association's previous forecast of US$41 billion issued before the escalation of the conflict involving Iran. The downgrade reflects a dramatic increase in jet fuel prices following disruptions to energy supplies and transportation routes across the region. Fuel costs are now expected to reach around US$350 billion, compared with roughly US$252 billion in 2025, adding nearly US$100 billion to airlines' collective fuel bill. IATA Director General Willie Walsh said the industry's outlook has deteriorated significantly as war-related disruptions continue to affect both fuel markets and airline operations. While demand for air travel remains resilient, higher operating costs are expected to cut profit margins across virtually every region. Industry-wide net profit margins are now forecast to fall to approximately 2%, compared with earlier expectations of more than 4%. Profitability on a per-passenger basis is also expected to decline sharply, underscoring the fragile economics of commercial aviation despite record revenue generation. According to IATA, global airline revenues are still projected to exceed US$1.16 trillion, supported by steady passenger demand and limited capacity growth. However, much of that revenue growth is being offset by rising fuel expenses, longer flight routings and broader operational disruptions. The conflict has forced many carriers to avoid affected airspace across parts of the Middle East, resulting in longer flight paths, increased fuel burn and higher operating costs. Airlines have also faced challenges securing fuel supplies in some markets as disruptions ripple through global energy and refining networks. The financial pressure comes at a time when airlines are already dealing with aircraft delivery delays from major manufacturers Boeing and Airbus, as well as persistent engine reliability issues. The shortages have compelled many carriers to continue operating older aircraft that consume more fuel, further increasing costs. Walsh criticized ongoing supply-chain constraints affecting aircraft and engine production, arguing that delays are preventing airlines from improving fleet efficiency at a time when fuel costs have become the industry's biggest challenge. The Middle East is expected to experience the most severe impact from the crisis. IATA warned that carriers in the region could collectively slip into losses due to weakened demand, airspace restrictions and operational disruptions linked to the conflict. Other regions are expected to remain profitable, although at lower levels than previously forecast. Industry executives also cautioned that elevated fuel prices could trigger additional airline failures and accelerate consolidation across the sector. Several carriers are already adjusting schedules, reducing flight frequencies and reviewing capacity plans in response to higher operating expenses. Brazilian carrier Azul recently announced further reductions to flight frequencies as it seeks to mitigate the impact of rising fuel prices, while Air New Zealand indicated it expects elevated fuel costs to persist into 2027 despite fuel-hedging measures. Airline executives acknowledged that fare increases may become increasingly difficult to avoid if fuel prices remain elevated. However, strong travel demand and constrained capacity have thus far helped airlines maintain pricing power, particularly on long-haul international routes. Despite the challenges, IATA maintains that the industry remains fundamentally resilient. Passenger demand continues to grow globally, and airline revenues are still expected to reach record levels. Nevertheless, executives warned that sustained geopolitical instability and fuel-market volatility could continue to weigh heavily on profitability through 2026 and beyond. The revised forecast marks one of the most significant outlook downgrades since the industry's recovery from the COVID-19 pandemic and highlights the aviation sector's continued vulnerability to geopolitical shocks and energy-market disruptions.

IATA Cuts 2026 Global Airline Profit Outlook As Middle East Tensions Raise Fuel Costs

Aviation Today News Desk / June 8, 2026

Rio De Janeiro, Brazil: The International Air Transport Association (IATA) has sharply reduced its outlook for global airline profitability in […]

Delhi Slashes ATF VAT From 25% To 7% For Six Months Amid Rising Fuel Costs SEO DES: Delhi cut ATF VAT to lower airline costs and stabilise fares as fuel forms 30–40% of expenses; annual revenue loss may reach ₹985 crore SOCIAL: The Delhi government has cut VAT on Aviation Turbine Fuel (ATF) from 25% to 7% for six months to support airlines amid rising fuel costs and the ongoing West Asia crisis. The decision was approved by the Cabinet led by Rekha Gupta. Officials said the move aims to reduce airline operating costs and stabilise airfares, as ATF accounts for nearly 30–40% of airline expenses. The tax cut may lead to an estimated annual revenue loss of around ₹985 crore for Delhi. The move follows Maharashtra’s recent ATF VAT reduction. Delhi said lower aviation taxes would strengthen connectivity and support operations at Indira Gandhi International Airport, India’s busiest airport. New Delhi, India: The Delhi government has reduced the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent for an initial period of six months, in a move aimed at easing operational pressure on airlines and stabilising airfares amid rising global fuel volatility linked to the ongoing West Asia crisis. The decision was approved during a Cabinet meeting chaired by Delhi Chief Minister Rekha Gupta. In an official statement issued after the meeting, the Delhi government said, “Delhi government has decided to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 per cent to 7 per cent, a move which is likely to benefit the airlines and common passengers.” The concessional VAT rate will remain in effect for six months initially, according to the Chief Minister’s Office. Officials said the measure has been introduced against the backdrop of increasing pressure on the aviation industry due to geopolitical instability, fluctuating crude oil prices and operational disruptions caused by tensions in West Asia. Chief Minister Rekha Gupta described the move as a “major economic decision” taken during a period of “global crisis and rising competition,” adding that the government intends to support aviation growth, tourism, logistics and overall economic activity in the national capital. The Delhi government acknowledged that the tax reduction could result in an estimated annual revenue loss of nearly ₹985 crore. Despite the expected revenue impact, the administration stated that improving connectivity and maintaining Delhi’s competitiveness as India’s largest aviation hub remained a priority. According to official data shared by the government, VAT on ATF currently contributes around ₹1,368 crore annually to Delhi’s revenues and accounts for nearly 19 per cent of the government’s total yearly VAT collection. The government also highlighted that ATF continues to remain outside the Goods and Services Tax (GST) regime. Although GST has been in force nationwide since 2017, states retain the authority to levy VAT on six petroleum products, including aviation turbine fuel, under the State List of the Constitution. Industry estimates cited by the Delhi government indicate that ATF accounts for nearly 30–40 per cent of an airline’s operating expenses, making fuel one of the largest cost components for carriers. Officials said persistent fuel price pressure caused by geopolitical tensions, supply chain disruptions and periodic airspace restrictions has significantly affected airline balance sheets and domestic ticket pricing. The announcement came a day after the Maharashtra government reduced VAT on ATF from 18 per cent to 7 per cent for six months, effective May 15. Maharashtra officials stated that the move was aimed at providing relief to airlines and passengers amid rising operational costs linked to the West Asia crisis and elevated crude oil prices. Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu welcomed Maharashtra’s decision and thanked Maharashtra Chief Minister Devendra Fadnavis for the “timely intervention,” saying the move would help keep airfares under control during a period of rising global cost pressures. Delhi also underlined the strategic importance of Indira Gandhi International Airport, which handled nearly eight crore passengers during FY2024-25, making it the country’s busiest airport. The government said maintaining competitive aviation taxes would help strengthen Delhi’s position as India’s primary aviation, trade and logistics hub. Officials further noted that several states continue to impose significantly higher VAT rates on aviation fuel. According to government data cited in reports, Tamil Nadu currently levies the highest VAT on ATF at 29 per cent, followed by West Bengal at 25 per cent. The aviation sector has been facing mounting operational challenges in recent months, including airspace closures, route diversions and rising fuel costs triggered by escalating tensions in West Asia. Analysts expect the tax reduction measures by Delhi and Maharashtra to offer temporary relief to airlines operating domestic services from major hubs.

Delhi Slashes ATF VAT From 25% To 7% For Six Months Amid Rising Fuel Costs

Aviation Today News Desk / May 18, 2026

New Delhi, India: The Delhi government has reduced the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25

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