GUWAHATI: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday, June 3, approved a one-time budgetary support of up to ₹10,000 crore for Oil Marketing Companies (OMCs) to help stabilise Aviation Turbine Fuel (ATF) prices for scheduled Indian airlines amid ongoing volatility in global fuel markets triggered by the West Asia crisis.
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The support will be provided as an interest-free advance to OMCs through the Ministry of Petroleum and Natural Gas. The initiative is aimed at cushioning airlines from sharp fluctuations in ATF prices and ensuring greater predictability in fuel costs for both domestic and international operations.
Under the approved mechanism, OMCs will be compensated whenever international ATF prices exceed a benchmark level determined by the government. Once global fuel prices moderate, the differential amount will be recovered from OMCs and returned to the Consolidated Fund of India through a recovery and settlement process.
The scheme will be available to all willing scheduled Indian carriers and will cover both domestic and international flight operations. Participating airlines will enter into agreements with OMCs and will procure ATF exclusively from them under the arrangement for up to three years, subject to annual review or until the support amount is fully recovered.
The government said the measure is intended to provide stability to airline operations at a time when ATF prices have surged significantly.
According to official estimates, international ATF prices increased from around ₹60.50 per litre in March 2026 to ₹142 per litre in May 2026 due to the ongoing crisis in West Asia.
ATF accounts for nearly 40 per cent of airline operating costs and can rise to as much as 60 per cent during periods of extreme fuel price volatility. Indian carriers have also faced additional cost pressures due to the closure of Pakistani airspace, which has resulted in longer flight routes to destinations in Europe, North America and Central Asia.
A monitoring committee comprising representatives from the Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas and Department of Expenditure will oversee implementation, verify claims and supervise reconciliation and settlement processes. All claims and recoveries under the scheme will be subject to audit.
The ATF price stabilisation support will remain in force for 36 months, with provision for annual review or until the advance amount is fully recovered, whichever is earlier.