Indian airlines are facing a sharp increase in operating costs as insurers impose a war risk premium on flights entering Middle East airspace amid the escalating Iran conflict.
Industry sources told India Today TV that airline operators are now paying additional insurance charges for every aircraft flying into the Middle East, significantly increasing the cost of operations on these routes.
The added war risk premium applies to every flight operating to or through Middle East destinations, with insurers charging higher rates due to the growing security risks in the region.
According to industry insiders, a major Indian airline group is paying nearly Rs 30 lakh for each round trip operated by a narrow-body aircraft. For wide-body aircraft, the additional insurance cost can go up to around Rs 1 crore per round trip.
The premiums are being charged despite the fact that aviation insurance is usually calculated annually based on the routes airlines plan to operate in a year.
However, due to the escalating Iran conflict and heightened risks in the region, insurers have begun imposing additional war risk premiums on every flight entering Middle East destinations.
Sources said airlines are currently absorbing a significant portion of the increased insurance expenses to avoid a sharp spike in ticket prices.
Industry insiders told India Today that one major airline group is passing on only about 25–30 per cent of the additional war risk premium to passengers, while the remaining cost is being absorbed by the airline.
Even with airlines absorbing a large share of the additional insurance burden, ticket prices could still rise if the conflict continues.
Airlines are already dealing with higher aviation turbine fuel (ATF) prices due to the tensions in West Asia, which have pushed global crude oil prices higher.
In response to rising fuel costs, Air India and Air India Express have already introduced a fuel surcharge, while other airlines are still evaluating similar measures.
With both fuel costs and insurance premiums rising, airlines warn that sustained geopolitical tensions in the region could eventually lead to higher airfares on Middle East routes.
