The government has revealed the operational framework for the newly approved Rs 10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund, aimed at cushioning Indian airlines from soaring oil prices in the wake of the West Asia crisis.
Under the scheme, the Centre will provide a one-time budgetary support of Rs 10,000 crore as an interest-free advance to OMCs. The support will be used to compensate Oil Manufacturing Companies whenever the prevailing Import Parity Price of ATF exceeds a benchmark price determined under an approved mechanism.
The scheme is open to all willing scheduled Indian airlines for both domestic and international operations. By capping the effective fuel cost borne by carriers, the government aims to provide relief to airlines during periods of volatile global fuel prices.
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Under this one-time arrangement, participating airlines will procure ATF only from OMCs for up to three years or until the advance amount is fully recovered, whichever is earlier. Further, ATF price stabilisation support will be enforced for a period of 3 years, but will be open to expansion.
International ATF prices have surged nearly 2.5 times in recent months, rising from Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026. To shield the domestic aviation sector from the sharp increase, the government has capped ATF prices for domestic operations at Rs 75.6 per litre.
ATF is one of the largest cost components for airlines, accounting for around 40% of their operating expenses. The steep rise in fuel prices has severely impacted both carriers and OMCs.
What Are The Benefits Of ATF Fund?
The scheme will help stabilise ATF prices for scheduled Indian carriers, prevent disruption of airline operations, and even shield air passengers from fare spikes driven by global price surge, as per the government.
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Additionally it aims to safeguard 77 lakh jobs dependent on the aviation ecosystem along with substantial public investment in airport infrastructure by keeping airline operations viable.
Lastly, the government believes that the ATF Fund will help maintain regional and international connectivity to Europe, North America and Central Asia given Pakistan airspace closure.
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