India’s Union Cabinet has approved a one time support package of up to Rs 10,000 crore for Oil Marketing Companies (OMCs) to stabilize Aviation Turbine Fuel (ATF) prices for Indian airlines. The support will be given as an interest free advance and will help airlines manage rising fuel costs caused by the West Asia crisis.
The scheme will cover all willing scheduled Indian airlines for both domestic and international operations. It will introduce a fixed ATF price mechanism, giving airlines more certainty in fuel costs and reducing exposure to sudden price spikes.
International ATF prices have jumped nearly 2.5 times, from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026. Fuel accounts for around 40% of airline operating costs and can rise to 60% during periods of extreme volatility.
Under the plan, OMCs will be compensated when global ATF prices remain above the benchmark level. When prices fall, the support amount will be recovered from OMCs and returned to the Consolidated Fund of India through a recovery and true up mechanism.
Participating airlines must purchase ATF only from OMCs under an agreement valid for up to three years, subject to annual review. A committee comprising officials from Civil Aviation, Petroleum and Natural Gas, and Expenditure departments will monitor implementation and audit claims.
The government said the measure will help keep air services running, reduce fare volatility, support connectivity to Tier II and Tier III cities, protect jobs across the aviation ecosystem, and strengthen tourism, trade, exports, and economic growth.
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