New Delhi, June 03: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a one-time budgetary support package of ₹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 energy markets.
The support aims to shield airlines from the impact of sharply rising fuel costs triggered by the West Asia crisis while protecting OMCs from financial losses resulting from elevated international ATF prices.
Under the approved framework, the government will provide interest-free advances of up to ₹10,000 crore to OMCs through the Ministry of Petroleum and Natural Gas. The assistance will remain operational for up to 36 months, subject to annual review, or until the entire support amount is recovered and settled.
According to the Cabinet decision, the mechanism will compensate OMCs whenever international ATF prices exceed a benchmark level determined under the approved pricing framework. When global fuel prices decline, the excess support amount will be recovered from OMCs and returned to the Consolidated Fund of India.
The scheme will be available to all participating scheduled Indian airlines for both domestic and international operations, providing greater predictability in fuel costs and reducing exposure to sudden price spikes.
The arrangement will be implemented through a tripartite Memorandum of Understanding (MoU) involving participating airlines, OMCs, the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas.
As part of the mechanism, airlines opting into the scheme will procure ATF exclusively from OMCs for up to three years, subject to annual review and recovery conditions.
The government expects the measure to improve financial planning and operational stability for airlines, particularly at a time when fuel expenses constitute one of the largest components of airline operating costs.
Officials also highlighted broader economic benefits, noting that stable aviation fuel prices could support growth in tourism, hospitality, trade, exports, regional connectivity and investment activity.
The decision comes against the backdrop of a sharp rise in global aviation fuel prices. International ATF prices have surged nearly 2.5 times, increasing from approximately ₹60.50 per litre in March 2026 to around ₹142 per litre in May 2026 due to disruptions linked to the ongoing West Asia crisis.
The Cabinet said the intervention reflects the government’s commitment to supporting the aviation sector while ensuring continuity in air connectivity and economic activity during a period of global energy market uncertainty.
