The Union Cabinet capped the price of Aviation Turbine Fuel (ATF) at Rs 75.60 per litre. A Rs 10,000 crore price stabilization fund has been set up to help Oil Marketing Companies subsidise ATF for airlines amid the West Asia crisis.
The Union Cabinet has capped the rate for Aviation Turbine Fuel at Rs 75.60 per litre for domestic operations in a bid to stabilize the surging prices of ATF due to the West Asia crisis. The government announced a Rs 10,000 crore price stabilization fund to help the Oil Marketing Companies to subsidise ATF prices, Union Minister Ashwini Vaishnav said in a briefing on the cabinet decisions on Wednesday
Rs 10,000 Crore Price Stabilization Fund
"Government has approved one-time budgetary support not exceeding Rs.10,000 crore for Oil Marketing Companies (OMCs) to provide ATF price stabilisation support to Scheduled Indian Airlines for their domestic and international operations," he said.
The budgetary support shall be in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas. The support shall be provided to OMCs to facilitate stable ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis. When international ATF prices moderate, the differential amount shall be recovered from OMCs and returned to the Consolidated Fund of India. The arrangement shall continue until the entire support amount is fully recovered and settled.
Scheme Implementation and Conditions
"The scheme shall be available to all willing Scheduled Indian carriers for both domestic and international operations. The arrangement will be implemented through an MoU between participating Indian airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum & Natural Gas as signatories. Under this one-time arrangement, participating airlines will procure ATF only from OMCs for up to three years, subject to annual review or until the advance amount is fully recovered, whichever is earlier," said an official release.
Impact of West Asia Crisis on ATF Prices
Due to the ongoing West Asia crisis, international ATF prices have surged nearly 2.5 times from Rs.60.50/ litre in March 2026 to Rs.142/litre in May 2026. ATF accounts for nearly 40% of an airline's operating cost. Therefore, this volatility in ATF prices has resulted in high cost pressure on airline financials. ATF accounts for nearly 40% of airline operating costs and during periods of extreme fuel volatility, can constitute up to 60% of total operating expenditure, the release said (ANI)
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