The Union Cabinet has approved a Rs 10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to help the aviation sector cope with the sharp rise in global fuel prices. The decision comes amid recent developments in West Asia that have pushed up international ATF prices and increased pressure on airlines.
International ATF prices increased 2.5 times between March and May 2026. During the same period, ATF prices jumped from Rs 60.5 per litre in March to Rs 142 per litre in May.
To provide relief, the government has capped ATF prices for domestic airline operations at Rs 75.6 per litre.
Fuel is one of the biggest expenses for airlines, accounting for nearly 40% of their operating costs. The sharp increase in fuel prices has affected both airlines and Oil Marketing Companies (OMCs).
To address the situation, the Cabinet has approved the Aviation Turbine Fuel Price Stabilisation Fund with a total size of Rs 10,000 crore.
The fund will support both domestic and international flight operations. It has been designed as a self-sustaining revolving fund, allowing it to continue functioning over time.
The government said the fund will help stabilise ATF prices for scheduled Indian carriers and prevent disruptions to airline operations caused by global fuel price volatility.
The move is also expected to protect passengers from sharp increases in airfares that could result from rising fuel costs.
The fund is expected to safeguard around 77 lakh jobs linked to India’s aviation ecosystem.
It will also help protect the substantial public investment made in airport infrastructure by ensuring that airline operations remain viable despite higher fuel costs.
In addition, the measure is aimed at maintaining regional and international air connectivity, including routes to Europe, North America and Central Asia, especially in the backdrop of the continued closure of Pakistan’s airspace.