New Delhi: The Union Cabinet has approved one-time budgetary support of up to ₹10,000 crore for oil marketing companies to help stabilise aviation turbine
fuel prices for scheduled Indian airlines. The move comes at a time when jet fuel prices have shot up sharply due to the ongoing West Asia crisis.
According to the Ministry of Civil Aviation’s statement, the support will be routed as an interest-free advance through the Ministry of Petroleum and Natural Gas. The idea is simple enough. When international ATF prices move above a set benchmark, oil marketing companies will be compensated under the approved mechanism.
Why ATF price support matters for airlines
Aviation turbine fuel, or ATF, is one of the biggest costs for airlines. The government said ATF makes up nearly 40 per cent of airline operating costs. During high price swings, that share can go up to nearly 60 per cent.
That is a lot of pressure on any airline balance sheet. Anyone who has booked a last-minute flight knows how quickly fares can jump. Fuel prices are one big reason behind that pain.
The government said international ATF prices rose nearly 2.5 times from ₹60.50 per litre in March 2026 to ₹142 per litre in May 2026. That kind of jump can hurt margins, push up fares and make route planning harder.
How the scheme will work
Under the scheme, willing scheduled Indian carriers will be eligible for ATF price stabilisation support for domestic and international operations.
The arrangement will work through a memorandum of understanding between participating airlines and oil marketing companies. The Ministries of Civil Aviation and Petroleum and Natural Gas will also be signatories.
Participating airlines will buy ATF only from oil marketing companies for up to three years. The plan will be reviewed every year or continue until the support amount is fully recovered.
Airspace closure has added more pressure
The government also pointed to the closure of Pakistan’s airspace for Indian carriers. This has forced longer routes to Europe, North America and Central Asia.
Longer flying means more fuel use. More fuel use means higher costs. It is not complicated, but the bill can get very big very fast.
What it could mean for flyers
The government said the mechanism is aimed at keeping airline operations stable, supporting domestic and international connectivity and moderating fare volatility.
The move may also help flights to regional, Tier-II and Tier-III cities, where route economics are often tighter. Tourism, hospitality, logistics and trade could gain if airlines avoid sudden cuts in service.
A monitoring committee with representatives from the Civil Aviation Ministry, Petroleum Ministry and Department of Expenditure will oversee implementation, claims, reconciliation and settlement. All claims and recoveries will be audited.
