ATF Price Stabilisation Fund for Indian Airlines

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The Union Cabinet recently approved a Rs 10,000 crore budgetary support package for public sector oil marketing companies (OMCs) to stabilize aviation turbine fuel prices for Indian carriers.
This decision comes in response to severe global fuel price spikes caused by the ongoing West Asia conflict.
International aviation turbine fuel prices surged dramatically from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026, marking a 2.5 times increase.
The newly established Price Stabilization Fund acts as a temporary single-window buffer mechanism implemented by the Central Government to protect domestic operators.

Aviation turbine fuel is a specialized fuel used in aircraft gas-turbine engines, representing nearly 40% of airline operating costs.
The fund provides predictable and fixed-price ATF supply, shielding airlines from sudden global market volatility.
The government allocates up to Rs 10,000 crore as an interest-free advance through the Ministry of Petroleum and Natural Gas to offset oil marketing company losses.
A revolving recovery model ensures that when global rates drop below the designated threshold, the surplus is recovered and returned to the Consolidated Fund of India.
The arrangement remains active for three years or 36 months, with provisions for annual reviews and full cash recovery.
Participating airlines sign a formal memorandum of understanding to purchase aviation fuel exclusively from public sector oil marketing companies during this period.
The facility is restricted exclusively to Indian carriers and excludes foreign airlines, ensuring targeted relief for domestic operators.

A dedicated monitoring committee oversees implementation, claim verification, and strict independent audits.
This committee includes representatives from the Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas, and the Department of Expenditure.
The initiative aims to moderate passenger airfares, maintain domestic and international flight connectivity, and protect oil companies from extreme financial losses.