Air India cuts 20% domestic flights as jet fuel tops ₹1 lakh/kl
Synopsis
Air India is axing roughly 20% of its domestic flights for the summer as jet fuel has crossed ₹1 lakh per kilolitre — up from ₹80,000 before the Iran war. With losses reportedly hitting ₹26,800 crore in FY26, a 12-fold jump year-on-year, the Tata Group faces a fresh capital call while passengers on select routes face disrupted schedules.
Key Takeaways
Air India has temporarily cut frequencies on select domestic routes for June–August 2026 , with an expected reduction of around 20% of domestic flights.
Jet fuel costs have surged from ₹80,000 per kilolitre to over ₹1 lakh per kilolitre following the outbreak of the Iran war .
Fuel accounts for approximately 40% of Air India's operational costs.
The airline operates around 4,400 weekly flights — roughly 3,600 domestic and 800 international .
Air India's reported losses for FY2025–26 stand at ₹26,800 crore , a 12-fold increase over the previous year.
Affected passengers are being offered alternative flights, complimentary date changes, or full refunds.
Air India has temporarily reduced flight frequencies on select domestic routes for the June–August 2026 period, as the Tata Group-owned carrier battles mounting losses driven by a sharp surge in aviation turbine fuel prices linked to the ongoing Middle East conflict. The airline confirmed the move in an official statement on Wednesday, 27 May 2026.
Scale of the Cutback
The airline is expected to scrap roughly 20 per cent of its domestic operations, a significant reduction from its current schedule of approximately 3,600 domestic flights weekly. Air India operates around 4,400 weekly flights in total, including nearly 800 international services. The domestic cuts follow an earlier announced scaling back of certain international routes during the same period.
In its statement, the airline said: 'In continuation of our previously announced adjustments to select international services between June and August 2026, we have temporarily rationalised operations on certain domestic routes during the same period, with a reduction in frequencies on select routes.'
The Fuel Cost Crisis
An Air India official said the cost of jet fuel has surged from around ₹80,000 per kilolitre before the Iran war to over ₹1 lakh per kilolitre — a rise that has rendered operations on certain routes financially unviable. Fuel accounts for approximately 40 per cent of the airline's operational costs, making it one of the most sensitive variables in its cost structure.
The price of aviation turbine fuel varies across states depending on the VAT levied by individual state governments, adding further complexity to route-level profitability calculations.
Cascading Effect on Domestic Demand
Beyond direct cost pressures, airline officials noted that the reduction in international services has had a cascading effect on demand for domestic connecting flights into hubs such as Delhi and Mumbai. Fewer international arrivals and departures mean fewer passengers requiring domestic connections — compounding the case for route rationalisation.
This is notably the second round of capacity cuts Air India has announced in the current conflict period, signalling that the airline does not expect a rapid normalisation of fuel prices.
Financial Pressure on Tata Group
Air India is reported to have accumulated a loss of ₹26,800 crore for financial year 2025–26, according to reports — a 12-fold increase over the loss recorded in 2024–25. The scale of the losses is expected to require a fresh fund infusion from the Tata Group, placing the airline management under intense pressure to contain costs and chart a credible path to profitability.
Passenger Relief Measures
Air India assured affected passengers that support would be provided through alternative flight arrangements, complimentary date changes, or full refunds, wherever applicable. The airline added that it would 'continue to monitor demand and operating conditions closely, with a view to restoring frequencies as conditions stabilise.'
The timeline for restoration of full schedules remains contingent on fuel price movements and the broader trajectory of the Middle East conflict.
Point of View
000 to over ₹1 lakh per kilolitre in jet fuel is not just an Air India problem — it is an industry-wide margin shock. What makes Air India's position more precarious is the timing: the airline is mid-turnaround, carrying legacy losses and still dependent on Tata Group capital infusions. A 12-fold jump in annual losses to ₹26,800 crore raises a pointed question about whether the turnaround thesis remains intact, or whether the conflict has simply deferred it by another financial year. The real test will be whether management can restore routes quickly once fuel stabilises, or whether competitor IndiGo and others use this window to permanently capture Air India's domestic share.
NationPress
12 Aug 2026
Frequently Asked Questions
Why is Air India cutting domestic flights in 2026?
Air India is cutting roughly 20% of its domestic flights between June and August 2026 because jet fuel costs have surged past ₹1 lakh per kilolitre — up from around ₹80,000 before the Iran war — making several routes financially unviable. Fuel constitutes approximately 40% of the airline's operating costs.
How many flights is Air India cancelling?
Air India operates around 3,600 domestic flights weekly and is expected to reduce that number by approximately 20%, though the airline has not publicly specified which routes are affected. The cuts are described as temporary, covering June through August 2026.
What are Air India's financial losses in FY2025–26?
Air India is reported to have posted a loss of ₹26,800 crore in FY2025–26, representing a 12-fold increase over its losses in FY2024–25. The scale of the losses is expected to require a fresh capital infusion from the Tata Group.
What options do affected Air India passengers have?
Air India has stated that passengers on affected routes will be offered alternative flight arrangements, complimentary date changes, or full refunds, wherever applicable. Passengers are advised to contact the airline directly for rebooking assistance.
When will Air India restore its full domestic schedule?
Air India has not specified a date, saying it will 'monitor demand and operating conditions closely, with a view to restoring frequencies as conditions stabilise.' Restoration is effectively tied to a normalisation of jet fuel prices and the broader Middle East situation.
