Cabinet Approves Rs 10,000-Crore Aviation Turbine Fuel Price Stabilisation Fund

The Union Cabinet, headed by Prime Minister Narendra Modi, on Wednesday approved the creation of a Rs 10,000-crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund, a major intervention aimed at protecting airlines from soaring fuel costs triggered by geopolitical tensions in West Asia.

Announcing the decision, Union Minister Ashwini Vaishnaw said international ATF prices have surged sharply due to the ongoing crisis in the region, putting significant financial pressure on airlines and oil marketing companies.

Why the Fund Was Needed

International ATF prices increased nearly 2.5 times, rising from Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026. To provide relief to domestic carriers, the government has already capped ATF prices at Rs 75.6 per litre for

domestic operations.

The government noted that aviation fuel accounts for nearly 40 per cent of airline operating costs, making carriers highly vulnerable to global energy price shocks.

Key Features of the Fund

• Cabinet approved an ATF Price Stabilisation Fund of Rs 10,000 crore
• The fund will be available for both domestic and international airline operations
• It will function as a self-sustaining revolving fund
• The mechanism is intended to absorb the impact of sudden spikes in global aviation fuel prices

Expected Benefits

The government said the fund will help:

• Stabilise ATF prices for scheduled Indian airlines
• Prevent disruptions in airline operations
• Protect passengers from sharp increases in airfares caused by fuel price shocks
• Safeguard around 77 lakh jobs linked to the aviation ecosystem
• Protect public investments made in airport infrastructure by ensuring airline viability
• Maintain regional and international connectivity, particularly to destinations in Europe, North America and Central Asia, amid challenges arising from the closure of Pakistan’s airspace