New Delhi: The Union Cabinet has approved a Rs. 10,000 crore price stabilisation fund for aviation turbine fuel (ATF) to cushion airlines from rising fuel costs, Information Minister Ashwini Vaishnaw announced on Wednesday.
The decision comes amid a sharp rise in ATF prices triggered by the West Asia crisis, with rates increasing from Rs.60.5 per litre in March 2026 to Rs.142 per litre in May 2026. The government has capped ATF for domestic operations at Rs.75.6 per litre.
Under the scheme, oil marketing companies (OMCs) will receive interest-free advances to compensate for losses when import parity prices exceed a government-set benchmark. The arrangement, valid for up to 36 months or until full recovery, will be monitored by a committee from the Ministries of Civil Aviation, Petroleum and Natural Gas, and the Department of Expenditure.
The fund aims to stabilise fuel costs for scheduled Indian carriers, covering domestic and international routes, and reduce fare volatility for passengers.
It also seeks to protect an estimated 77 lakh jobs linked to the aviation sector and maintain connectivity to Europe, North America and Central Asia amid Pakistan airspace restrictions.
The government said ATF accounts for nearly 40% of airline operating costs, rising further during fuel shocks. Officials added that higher fuel prices have already increased airfares and reduced demand on international routes.
The mechanism will continue until the full ₹10,000 crore is recovered and settled with OMCs.
