Indian Cabinet Backs Airlines with ₹10,000 Cr Fund for Fuel Price Stability

India's Cabinet approved a ₹10,000 Cr fund to stabilize aviation fuel prices for domestic airlines. This move counters sharp ATF fluctuations from the West Asia crisis and Pakistan airspace closure, aiming to ensure operational stability and connectivity.

As component of the structure, getting involved airlines will certainly obtain ATF solely from OMCs for a period of up to 3 years, subject to annual review or until the advance quantity is completely recouped, whichever is previously.

A tracking board making up agents from the Ministry of Civil Aeronautics, Ministry of Oil and Natural Gas, and the Division of Expenditure will certainly oversee implementation, case settlement, confirmation and reconciliation, it claimed.

Key Approval for Airlines

The Union Cupboard on Wednesday authorized an one-time Price Stabilisation Fund of approximately 10,000 crore to assist shield scheduled Indian airline companies from sharp fluctuations in aviation generator gas (ATF) rates in the middle of the continuous West Asia dilemma.

Understanding Price Volatility & Impact

The federal government additionally stated that the closure of Pakistan’s airspace for Indian service providers has actually resulted in longer trip paths to Europe, North America and Central Asia, boosting fuel intake and operational prices. It said higher gas prices have actually added to an increase in long-haul passenger prices, a decrease in worldwide demand and reductions in solutions on several abroad routes.

The federal government stated the procedure is expected to supply security in ATF rates, assistance monetary and functional planning for airlines, and aid sustain residential and global air connection. It added that the mechanism would also limit the influence of fuel rate shocks on guests and support connectivity to remote, local, Tier-II and Tier-III cities.

According to the government, international ATF costs surged to 142 per litre in May 2026 from 60.50 per litre in March 2026, as a result of the West Asia crisis. ATF accounts for almost 40 percent of an airline’s operating expense and can climb to as high as 60 percent during durations of severe fuel price volatility.

Operational Mechanism

Under the authorized device, OMCs will certainly be made up for losses emerging from raised worldwide ATF prices whenever the dominating import parity cost surpasses a benchmark rate figured out by the federal government.