en.Wedoany.com Reported - India has approved a one-time budget support plan of INR 100 billion (approximately USD 1.2 billion) to stabilize aviation turbine fuel (ATF) prices for the country's airlines, in response to soaring fuel costs caused by ongoing conflicts in the West Asia region.
This support will be provided as interest-free advances to oil marketing companies (OMCs), aiming to help airlines cushion against unprecedented fuel price volatility, which has significantly increased operational expenditures in the aviation sector. Union Minister Ashwini Vaishnaw, while announcing the decision, stated that international ATF prices have surged from INR 60.5 per liter in March 2026 to INR 142 per liter in May 2026, primarily due to geopolitical tensions in the Middle East.
The government noted that the sharp rise in fuel costs has placed immense pressure on airlines. For carriers, ATF typically accounts for about 40% of operational expenses, which can rise to 60% during extreme volatility. The price increase has also impacted OMCs, which must maintain fuel supply despite high international prices. Although domestic ATF prices are capped, airlines operating international routes still face higher import parity pricing risks.
Under the approved framework, the government will provide interest-free advances to OMCs through the Ministry of Petroleum and Natural Gas. When international ATF prices exceed the government-approved benchmark price, the fund will be used to compensate OMCs. Airlines participating in the plan can secure fixed-price fuel procurement arrangements, thereby improving cost predictability. When global fuel prices decline, the difference will be recovered from OMCs and returned to the Consolidated Fund of India, making the arrangement self-correcting.
The plan applies to all willing Indian scheduled airlines, covering both domestic and international routes. Participating airlines must exclusively procure ATF from OMCs for the next three years. The plan will run for 36 months, with an annual review, or until all advances are recovered, whichever comes first. A supervisory committee comprising representatives from the Ministry of Civil Aviation, the Ministry of Petroleum and Natural Gas, and the Department of Expenditure will oversee implementation, claim verification, and auditing.
The central government stated that the fund aims to prevent disruptions in aviation operations and protect passengers from high ticket prices caused by soaring fuel costs. Vaishnaw said the fund helps stabilize ATF prices for Indian scheduled airlines, preventing operational disruptions while shielding passengers from fare increases due to global price surges. The government also emphasized the importance of maintaining international connectivity, especially given the current closure of Pakistani airspace, which forces Indian airlines to take longer routes to destinations in Europe, North America, and Central Asia, increasing fuel consumption and costs.
According to government estimates, this stabilization plan will help protect approximately 7.7 million jobs related to India's aviation ecosystem and safeguard investments in airport infrastructure. Officials also stated that the measure will support maintaining connectivity to tier-2 and tier-3 cities, including routes operated under the government's UDAN regional connectivity scheme. The news was welcomed by investors, with shares of IndiGo's parent company, InterGlobe Aviation, rising up to 1.62% following the cabinet decision.
The government said the support mechanism will continue until the full amount is recovered and settled, while providing temporary relief to airlines and fuel suppliers during one of the most severe fuel price surges in recent years.
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