Cut flab, not shut shop, KPMG tells India's loss-making aviation sector

Aviation Minister Praful Patel also voiced his concerns last month, urging ministers and oil companies to find ways of bailing out the domestic air carriers.

India's aviation sector is "at a crossroad" and "it is a matter of time before this dynamic sector becomes unhealthy," Patel said, warning that if "a vital sector like aviation go belly up...it will have a cascading effect or multiplied effect on the entire economy."

ATF prices have doubled over the last year and now forms almost 80 percent of overall operating costs and almost three-fourths of a budget airline's ticket fare.

But most airlines, which are suffering losses in millions of dollars every day, are in a dilemma as hiking airfares could lead to dwindling of passengers and losing them out to Indian Railway which charges lower priced train fares.

For the time being, most airlines have resorted to cutting routes, issuing e-tickets and charging for items such as snacks and checked luggage to cut their losses. Some, however, have also hiked fuel surcharges to offset high ATF rates.

"I'm really happy this has happened, as it's shaken people up. People should wake up and smell the daisies and say: my god, it's not hunky-dory, we need to get our act together and start getting leaner as an organization," Martin said.