INDUSTRY
Govt approves Rs 10,000-crore ATF fund to curb air fare surge, slash airlines’ costs
- IBJ Bureau
- Jun 04, 2026
The Union Cabinet has approved a Rs 10,000-crore Aviation Turbine Fuel (ATF) Price Stabilisation Programme to cushion airlines from soaring fuel costs, triggered by the West Asia crisis.
The programme is aimed at protecting air connectivity and limiting fare volatility.
The scheme will provide interest-free advances of up to Rs 10,000 crore to State-owned oil marketing companies (OMCs).
The advance payments are expected to enable the OMCs to supply ATF to scheduled Indian airlines at a stabilised price for domestic and international operations, according to a government statement.
The support mechanism comes as international ATF prices have surged to about Rs 142 per litre in May from Rs 60.50 per litre in March.
High prices have put financial pressure on airlines at a time when fuel accounts for nearly 40 per cent of operating costs and, in some cases, as much as 60 per cent.
Under the arrangement, the OMCs will be compensated whenever international import parity prices exceed a benchmark level set under the approved mechanism.
Any support extended to OMCs will be recovered once prices moderate.
Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw has said that the Budgetary support will help airlines in the backdrop of a rise in ATF prices due to the conflict and closure of airspace by Pakistan for Indian carriers.
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