Indian Airlines is likely to be hurt badly in case of a US attack on Iraq, which would lead to a massive increase in insurance premium and an additional burden of an estimated 25 per cent hike in aviation turbine fuel prices.

A war-risk insurance premium could be very high this time round, official sources said referring to the 1991 Gulf War. They recalled that a huge premium of Rs 600,000 per flight used to be paid for Indian Airlines' services to Kuwait at that time.

"The rupee-dollar exchange rate then was around ten. With an exchange rate of 49-50 per dollar and a hike in insurance premium, the war will impose a massive burden on the carrier," they said.