- The government plans to announce Rs 10,000 crore fund for the aviation sector
- The fund aims to support Aviation Turbine Fuel (ATF) related costs
- This move is in response to the ongoing conflict in the Middle East
The government has announced a Rs 10,000 crore stabilisation fund for the aviation sector to support ATF related costs amid ongoing conflict in the Middle East.
This comes after Indian airlines had reportedly asked refiners including Indian Oil Corp. and Bharat Petroleum Corp. to halt price increases for local flights until the end of the war.
The carriers were forced to reduce flights through March and April due to low demand. Domestic air traffic dropped 4.2% to little over 1.38 crore in April compared to March amid multiple headwinds, including relatively softer travel demand and rising operational costs due to higher fuel prices.
Last month, ATF prices for domestic airlines were raised by Rs 8,289.04 per kilolitre, or 8.56%, to Rs 1,04,927.18 per kl from Rs 96,638.14 per kl.
It must be noted that India is heavily dependent on imported crude and fuels and rising prices due to the conflict in the Middle East is primarily weighing heavily on the state-run refiners.
OMCs are staring at massive losses of up to Rs 1.2 lakh crore in the first quarter of FY27 as the sharp spike in global crude oil prices, triggered the ongoing conflict.
“The aviation turbine fuel prices are determined based on international benchmark rates,” Sujata Sharma, joint secretary in the oil ministry told reporters earlier. Oil marketing companies are still losing 30 rupees on every litre of jet fuel sold in the domestic market, she informed.
In order to support the aviation sector, the governement has already announced a number of measures such as rebates on plane parking charges, and tax reductions on fuel for flights operating out of Delhi and Mumbai.
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