Indian airlines are facing a significant rise in operating expenses as insurers introduce a war-risk premium for flights passing through Middle East airspace amid the escalating conflict involving Iran.
Industry sources told India Today TV that airline operators are now required to pay additional insurance charges for each aircraft flying to the Middle East, substantially increasing operational costs on these routes.
The war-risk premium applies to all flights operating to or transiting through Middle Eastern destinations, with insurers raising rates due to heightened security concerns in the region.
According to industry insiders, a major Indian airline group is paying nearly ₹30 lakh in additional insurance costs for each round trip operated by a narrow-body aircraft. For wide-body aircraft, the extra insurance expense can rise to around ₹1 crore per round trip.
These premiums are being levied even though aviation insurance is typically calculated on an annual basis, depending on the routes airlines plan to operate during the year.
However, with the Iran conflict intensifying and security risks in the region increasing, insurers have started imposing additional war-risk premiums on every flight operating to Middle East destinations.
Sources said airlines are currently absorbing a large share of these increased insurance costs in an effort to prevent a sharp rise in ticket prices.
Industry insiders told India Today that one major airline group is passing on only about 25–30 percent of the additional war-risk premium to passengers, while absorbing the remaining cost internally.
Even though airlines are absorbing a significant portion of the additional insurance costs, ticket prices may still increase if the conflict continues.
Airlines are already facing higher aviation turbine fuel (ATF) costs as tensions in West Asia push global crude oil prices upward.
In response to the rising fuel prices, Air India and Air India Express have introduced a fuel surcharge, while other carriers are still considering similar steps.
With both fuel expenses and insurance premiums climbing, airlines caution that prolonged geopolitical tensions in the region could eventually result in higher airfares on Middle East routes.