The Union Cabinet has approved the creation of an Aviation Turbine Fuel (ATF) Price Stabilisation Fund worth Rs 10,000 crore to address challenges faced by airlines, oil marketing companies, and passengers due to the prolonged Middle East conflict. The fund aims to act as a self-sustaining revolving mechanism to mitigate the impact of sharp surges in aviation fuel prices.
Key Features of the Fund
The fund will be provided as interest-free advances to Oil Marketing Companies (OMCs). These funds will compensate OMCs when international ATF prices remain significantly above a prescribed benchmark level. The move is designed to prevent sudden fuel cost spikes from disrupting airline operations amid volatile global energy markets.
Fixed-Price Framework
A central feature of the scheme is the introduction of a fixed-price framework for ATF. By reducing uncertainty around fuel expenses, the government aims to provide airlines with greater visibility over operating costs, enabling more effective financial planning. The scheme is open to all scheduled Indian carriers operating domestic and international services.
Recovery Mechanism
The support is not permanent. Once global fuel prices ease, the amounts advanced to OMCs will be gradually recovered and returned to the Consolidated Fund of India. The recovery process will continue until the entire advance is settled.
Benefits of the ATF Price Stabilisation Fund
According to the government, the fund will:
- Help stabilise ATF prices for scheduled Indian carriers
- Prevent disruption of airline operations
- Shield air passengers from fare spikes driven by global price surges
- Protect 77 lakh jobs dependent on the aviation ecosystem
- Safeguard substantial public investment in airport infrastructure by keeping airline operations viable
- Maintain regional and international connectivity to Europe, North America, and Central Asia, given the closure of Pakistan airspace
Price Surge Context
The government noted that due to the Middle East crisis, international ATF prices have increased 2.5 times, rising from Rs 60.5 per litre in March 2026 to over Rs 142 per litre in May 2026. The government has capped ATF prices at Rs 75.6 per litre for domestic operations. Since ATF accounts for around 40% of airline operating costs, the price surge has severely affected both airlines and OMCs.
