The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a one-time budgetary aid of Rs 10,000 crore for Oil Marketing Companies (OMCs). This support aims to stabilize Aviation Turbine Fuel (ATF) prices for Scheduled Indian Airlines amidst the current West Asia crisis. The assistance will be interest-free advances granted to OMCs through the Ministry of Petroleum and Natural Gas to mitigate losses due to fluctuating ATF prices.
The ATF price stabilization initiative will be effective for 36 months, with provisions for annual reviews or until the recovery/settlement of the advance amount, whichever comes first. This measure is intended to ensure stable ATF pricing for airlines amid the ongoing fuel price volatility triggered by the West Asia crisis.
The support package, as per an official statement, will extend up to Rs 10,000 crore as an interest-free advance to OMCs to aid in ATF price stabilization for Scheduled Indian Airlines. It will compensate OMCs for losses incurred when international ATF prices surpass the benchmark price determined under the approved mechanism. Additionally, any excess amount will be reclaimed from OMCs and returned to the Consolidated Fund of India once international ATF prices normalize.
The scheme is open to all interested Scheduled Indian carriers for both domestic and international flights. By adopting a fixed-price system for fuel costs, the mechanism offers greater cost predictability for airlines, reducing their vulnerability to sudden fuel price escalations. The implementation will involve an MoU between participating Indian airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas as signatories.
Participating airlines, under this arrangement, will exclusively procure ATF from OMCs for a period of up to three years, subject to annual reviews or until the recovery of the advance amount. This proposed mechanism is expected to enhance stability and predictability in ATF pricing for Indian airlines, facilitating improved operational and financial planning. The ripple effects of this measure are anticipated to benefit various sectors including tourism, hospitality, trade, exports, regional development, and investment.
Due to the ongoing West Asia crisis, international ATF prices have surged significantly, rising from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026.
