Government caps ATF prices, airlines hail ₹10,000 crore stabilisation fund

Major Indian airlines have welcomed the Central Government’s decision to introduce Aviation Turbine Fuel (ATF) price stabilisation support through a ₹10,000 crore fund amid a sharp rise in fuel costs linked to the ongoing West Asia crisis. The government approved the measure to provide relief to airlines facing increased operational expenses after ATF prices rose from ₹60.5 per litre in March 2026 to ₹142 per litre in May 2026. Under the scheme, ATF prices for domestic airline operations have been capped at ₹75.6 per litre, providing support to a sector where fuel accounts for nearly 40 per cent of operating costs.

According to the approved mechanism, a one-time budgetary support of up to ₹10,000 crore will be provided as an interest-free advance to oil marketing companies to facilitate ATF price stabilisation for scheduled Indian airlines. The fund will compensate oil marketing companies for losses incurred when international ATF prices exceed the benchmark price determined under the approved framework. The stabilisation support will remain operational for up to 36 months, subject to annual review or until the entire amount is recovered.

Air India, IndiGo, SpiceJet and Akasa Air welcomed the government’s decision and expressed appreciation for the support extended to the aviation sector. The airlines stated that the intervention would provide stability and predictability to airline operations during a period marked by elevated fuel prices and global uncertainty. They also acknowledged the role of the ministries and authorities involved in implementing the support mechanism.

The government stated that when global fuel prices decline, the differential amount will be recovered from oil marketing companies and returned to the Consolidated Fund of India. The initiative has been designed to maintain predictable ATF pricing for airlines during a period of exceptional volatility while supporting the continuity of domestic aviation services and operational stability across the sector.