Cabinet approves Price Stabilization Fund for Scheduled Indian Airlines towards ATF pricing

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved one-time budgetary support not exceeding Rs.10,000 crore for Oil Marketing Companies (OMCs) to provide ATF price stabilisation support to Scheduled Indian Airlines for their domestic and international operations.

Core Features
- ₹10,000 crore support: One-time interest-free advance to Oil Marketing Companies (OMCs).
- Fixed ATF pricing: Airlines get predictable fuel costs for both domestic and international operations.
- Recovery mechanism: When global ATF prices fall, OMCs repay the differential back to the Consolidated Fund of India.
- Exclusive supply: Airlines must source ATF only from OMCs under this arrangement for up to 3 years.
- Monitoring & audit: A committee will oversee claims, reconciliation, and settlement.
- Duration: 36 months, with annual review and possible extension if the corpus isn’t fully recovered.

Expected Outcomes
- Airlines: Relief from extreme fuel volatility (ATF is ~40–60% of operating costs).
- Passengers: Reduced fare volatility, more stable ticket prices.
- Connectivity: Sustains domestic and international routes, including Tier-II and Tier-III cities.
- Economy: Positive spillovers for tourism, trade, logistics, and regional development.
- Employment: Stability across airlines, airports, ground handling, MROs, and hospitality sectors.

Context
- ATF prices surged from ₹60.50/litre (Mar 2026) to ₹142/litre (May 2026) due to the West Asia crisis.
- Closure of Pakistan airspace has increased flight times and fuel burn for long-haul routes.
- Airlines have cut or suspended several international services due to cost pressures.

This fund is essentially a shock absorber—protecting both airlines and passengers from sudden spikes in global fuel prices while ensuring OMCs aren’t permanently burdened.

IndiGo Statement
“We are grateful to the Government of India, Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas and the concerned authorities for announcing Aviation Turbine Fuel (ATF) price stabilisation support to Scheduled Indian Airlines.

This timely intervention is a welcome relief that reflects the Government’s understanding of the critical role aviation plays in connecting people and enabling economic growth, while also fostering an environment that empowers airlines to serve passengers better and contribute towards India’s journey as a global aviation hub.”