Cabinet Approves ₹10,000 Crore ATF Price Stabilisation Fund for Airlines

The Union Cabinet on Wednesday approved a one-time Price Stabilisation Fund of up to ₹10,000 crore to protect Indian airlines from sharp fluctuations in aviation turbine fuel (ATF) prices triggered by the ongoing West Asia crisis. The government said the support would be extended to oil marketing companies (OMCs) through interest-free advances routed via the Ministry of Petroleum and Natural Gas. Under the mechanism, OMCs will be compensated whenever international ATF prices exceed a government-determined benchmark, helping airlines access fuel at more predictable rates.

The scheme will be available to all willing scheduled Indian carriers for both domestic and international operations. Participating airlines will be required to procure ATF exclusively from OMCs for up to three years, subject to annual reviews or until the entire support amount is recovered. A monitoring committee comprising representatives from the Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas, and the Department of Expenditure will oversee implementation, claim verification, reconciliation, and settlement processes.

According to the government, international ATF prices surged from ₹60.50 per litre in March 2026 to ₹142 per litre in May 2026, significantly increasing operating costs for airlines, where fuel accounts for nearly 40 per cent of expenses. The government also highlighted that Pakistan’s closure of its airspace to Indian carriers has led to longer flight routes, raising fuel consumption and operational costs. The new fund is expected to stabilize fuel pricing, support airline financial planning, sustain domestic and international connectivity, and reduce the impact of rising fuel costs on passengers, particularly in regional and remote destinations.

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