In corporate finance, financing decision has gained greater importance because the optimal capital structure and appropriate revenue goals can be created through proper mix of finance. Corporate managers generally prefer borrowings to other means of financing. Management of a company has to be very careful while deciding the extent of financial leverage in its capital structure because the right use of financial leverage can increase the shareholders' wealth whereas its improper use would adversely affect the interest of shareholders and the same time it would also measure of how sensitive the operating income is to the change in revenues. This study examines the empirical effects of Financial and Operating Leverage on Return on Equity of selected firms of Indian Airline Industry for the period from 2012-12 to 2016-17.