Cabinet approves ₹10,000 crore aviation fuel price stabilization support

Civil Aviation Minister Ram Mohan Naidu welcomes the landmark decision

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved a one-time budgetary support of up to ₹10,000 crore for Oil Marketing Companies (OMCs) to provide Aviation Turbine Fuel (ATF) price stabilization support to Scheduled Indian Airlines for their domestic and international operations.

The decision comes in response to the exceptional fuel price volatility arising out of the ongoing West Asia crisis, which has posed significant challenges for airlines across the world. The approved mechanism seeks to provide enhanced stability and predictability in ATF pricing for Indian carriers while ensuring continuity of air services and protecting passengers from the impact of sudden fuel price shocks.

Welcoming the Cabinet decision, Minister of Civil Aviation Shri Ram Mohan Naidu said: “Under the decisive leadership of Prime Minister Shri Narendra Modi, the Government has consistently taken timely and calibrated measures to safeguard the interests of passengers, airlines and the broader aviation ecosystem. Earlier, under the Emergency Credit Line Guarantee Scheme (ECLGS), nearly ₹5,000 crore was earmarked for airlines, providing critical liquidity support. Today, the Cabinet has once again taken a far-reaching decision by approving ₹10,000 crore of interest-free support to OMCs for ATF price stabilization. This intervention will bring significant relief to airlines by reducing uncertainty in fuel costs and will ultimately benefit our passengers through reduced airfare.”

The Minister further highlighted that the present decision builds upon a series of calibrated measures already undertaken by the Government, “Since the onset of this unprecedented situation, the Government has adopted a proactive and multi-layered approach to support the aviation sector while safeguarding passenger interests. For domestic operations, the increase in ATF base prices was moderated and capped at 25 per cent despite the much steeper rise witnessed in global fuel markets. In addition, landing and parking charges for domestic carriers were reduced by 25 per cent. Also, I am thankful to the Chief Ministers of Delhi and Maharashtra for reducing VAT on ATF to 7 per cent, from where nearly 75-80 per cent of the country’s ATF uplift takes place.”

The ATF constitutes nearly 40 per cent of airline operating costs under normal circumstances and can account for as much as 60 per cent of total operating expenditure during periods of extreme fuel price volatility. Such fluctuations can significantly impact airline operations, route planning and fare stability.

The approval of the ATF Price Stabilization Support Mechanism represents another important step in the Government’s continued efforts to strengthen the resilience of India’s aviation sector while advancing the vision of Viksit Bharat 2047 through enhanced connectivity, economic growth and Ease of flying.

Highlighting the impact of the decision, the Minister added, “The decision has been greatly appreciated by the aviation industry and beyond because of the huge cascading effect over other sectors like tourism, hospitality, trade and exports. With this we would be able to ensure continuity in air operations facilitating passengers as well as high value air cargo.”

The ATF price stabilization support mechanism will remain operational for a period of thirty-six months with provision for annual review or until the advance amount is fully recovered and settled, whichever is earlier. A Monitoring Committee comprising representatives of the Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas and Department of Expenditure shall oversee implementation, claim verification, reconciliation and settlement.

The Ministry of Civil Aviation has been closely monitoring the evolving situation and has remained in constant engagement with airlines and other stakeholders to assess operational challenges arising from the ongoing crisis.