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IndiGo, Air India seek government support during Iran crisis, sources say

Three sources said that IndiGo, India's largest airline, is asking New Delhi to reduce fuel taxes, and along with rival Air India they are also pressing for private airports in the Middle East to lower their charges. The conflict in the Middle East has made it more difficult for the carriers to make ends meet. IndiGo and Air India face a double blow as the Iran War makes it hard for carriers to access Middle East airspace, at a time that Indian airlines are banned from Pakistani airspace because of 'diplomatic tensions' between New Delhi & Islamabad.

IndiGo flies to the UK via Africa, while Air India adds a stop to some flights to North America.

Three?sources who are all familiar with this matter said that the airlines are lobbying for the Indian government to offer financial relief specifically in relation to aviation-related charges and taxes.

IndiGo wants to reduce the tax burden on aviation turbine fuel, which accounts for 30-40% (or more) of an airline's costs. However, this fuel is subject to a federal tax rate of 11%, and state taxes that can reach as high as 29 percent, according two sources.

IndiGo, Air India, and the Indian civil aviation ministry have not responded to comments.

IndiGo controlled 63.6% of the domestic market in January while Air India Group held 26.5%.

GROWING FINANCIAL CHALLENGES

IndiGo and Air India have also asked for the rationalisation of some charges at privately owned airports. These include fees charged to passengers. They claim that these are higher at private airports in certain cases and should be reduced.

Cirium data shows that the two largest?international carriers in the country did not operate 64% their 1,230 scheduled flights from February 28, when Israel and the U.S. launched their campaign against Iran to March 9.

Last week, HSBC stated that the current'situation' in the Middle East will have a "significant impact" on the profitability and cost of Indian airlines.

Air India also requested that the Indian government reduce the local taxes on premium-economy tickets from 18% to 5%, according to one source. According to reports, the airline owned by Tata Group and Singapore Airlines has predicted a $600 million annual loss due to a ban on Pakistani airspace that began in April 2025. The airline was sold by the Indian Government in 2022 and reported a $433 million loss last year. (Reporting Aditya KALA, Abhijith GANAPAVARAM; Editing Kirsten DONOVAN)

(source: Reuters)