Cabinet Approves Rs 10,000-Crore Fund Amid Rising Jet Fuel Prices

The Centre today approved Rs 10,000 crore for an aviation fuel price stabilisation fund, Information Minister Ashwini Vaishnaw announced. Vaishnaw stated that the conflict in the Middle East has forced aviation turbine fuel to increase 2.5 times -- Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026. 

The Centre has capped aviation turbine fuel at Rs 75.6 per litre for domestic operations. 

ATF accounts for roughly 40 per cent of the operating costs of airlines.  The price surge has severely impacted airlines and oil marketing companies. The Information Minister said that there are "huge benefits" to this big government decision. 

"The fund will help stabilise ATF prices for scheduled Indian carriers and will prevent disruption of airline operations. It will also shield air passengers from fare spikes driven by the global price surge," Vaishnaw stated.

"It will protect 77 lakh jobs dependent on the aviation ecosystem and safeguard substantial public investment in airport infrastructure by keeping airline operations viable. The fund will maintain regional and international connectivity to Europe, North America and Central Asia, given the Pakistan airspace closure," the Union Minister added. 

ATF price stabilisation support will be in force for a period of 36 months with provision for annual review or until the advance amount is fully recovered/settled, whichever is earlier.

The support will be provided to OMCs to facilitate stable ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis, according to an official statement.

"A one-time budgetary support of up to Rs 10,000 crore shall be provided as an interest-free advance to OMCs to support ATF price stabilisation for Scheduled Indian Airlines. The corpus shall compensate OMCs for losses arising from elevated international ATF prices whenever the prevailing Import Parity Price exceeds the benchmark price determined under the approved mechanism," according to the Cabinet note.

Moreover, when international ATF prices moderate, the differential amount will be recovered from OMCs and returned to the Consolidated Fund of India.

The arrangement will continue until the entire support amount is fully recovered and settled.