- The Union Cabinet approved a Rs 10,000 crore ATF Price Stabilisation Fund for airlines
- The fund aims to stabilise fuel costs and prevent steep airfare increases amid fuel price surge
- ATF prices rose from Rs 60.5 to Rs 142 per litre from March to May 2026 due to West Asia crisis
The Union Cabinet on Wednesday approved a Rs 10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund aimed at cushioning Indian airlines from a sharp surge in jet fuel prices triggered by the ongoing crisis in West Asia.
The fund, structured as a self-sustaining revolving mechanism, will be available for both domestic and international operations and is designed to ensure uninterrupted airline services, stabilise fuel costs and prevent steep airfare increases for passengers.
The move comes as international ATF prices have surged nearly 2.5 times, rising from Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026, putting significant pressure on airline finances and oil marketing companies (OMCs). ATF accounts for roughly 40% of airlines' operating expenses.
To ease the burden, the government has capped ATF prices for domestic operations at Rs 75.6 per litre. The newly approved fund will bridge the gap during the ongoing crisis period.
Addressing the media after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the decision was necessitated by the unprecedented rise in fuel prices.
"Due to the West Asia crisis, ATF prices had skyrocketed," Vaishnaw said.
According to government officials, airlines opting into the scheme will be able to access fuel at a stable price during the crisis period. Once market conditions normalise, a reimbursement mechanism will be put in place, with detailed operational guidelines to be issued by the Ministry of Civil Aviation.
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The government said the fund will help maintain operational viability for scheduled Indian carriers, many of which have also faced higher operating costs after being forced to take longer routes following the closure of Pakistani airspace to Indian airlines.
Officials said the measure is expected to support connectivity to key international destinations across Europe, North America and Central Asia, while safeguarding regional air links.
The government also highlighted the broader economic impact of the aviation sector, noting that nearly 77 lakh jobs are linked to the aviation ecosystem. Vaishnaw said around 70,000 jobs within the aviation sector itself had come under stress due to the recent spike in fuel costs.
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The government said the stabilisation fund would help protect employment, prevent disruptions in airline operations, shield passengers from fare shocks and safeguard substantial public investments made in airport infrastructure.
Apart from the ATF package, the Cabinet also approved a Rs 5,041 crore scheme for phasing out old trucks and buses in Delhi and sanctioned a Rs 8,301 crore coastal highway project connecting Rameswaram, Konark and Paradeep.
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