New Delhi, June 3: The Union Cabinet on Wednesday 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, aiming to shield carriers and passengers from the impact of global fuel price volatility triggered by the ongoing West Asia crisis.
The decision, taken at a meeting chaired by Prime Minister Narendra Modi, will cover both domestic and international operations of Indian airlines and is intended to provide greater predictability in fuel pricing while ensuring continuity of air services.
Welcoming the move, Civil Aviation Minister Ram Mohan Naidu described it as a significant intervention to support the aviation sector during a period of exceptional uncertainty in global energy markets.
He said the government had earlier extended liquidity support of nearly ₹5,000 crore to airlines under the Emergency Credit Line Guarantee Scheme (ECLGS) and had now approved ₹10,000 crore in interest-free support to OMCs for stabilizing ATF prices.
According to the government, aviation turbine fuel accounts for nearly 40 per cent of airline operating costs under normal circumstances and can rise to as much as 60 per cent during periods of extreme fuel price volatility, significantly affecting airline operations, route planning and airfare levels.
Naidu said the latest decision builds on a series of measures already taken to support airlines and protect passengers. These include capping increases in domestic ATF base prices at 25 per cent, despite steeper rises in international fuel markets, and reducing landing and parking charges for domestic carriers by 25 per cent.
The minister also acknowledged the governments of Delhi and Maharashtra for reducing Value Added Tax (VAT) on ATF to 7 per cent, noting that nearly 75 to 80 per cent of the country’s aviation fuel uplift takes place in the two states.
The government said the ATF Price Stabilization Support Mechanism would help reduce uncertainty in fuel costs, thereby easing financial pressure on airlines and helping maintain affordable airfares for passengers.
Officials said the support mechanism would remain operational for 36 months, with provisions for annual reviews or until the advance amount is fully recovered and settled, whichever occurs earlier.
A monitoring committee comprising representatives from the Ministry of Civil Aviation, Ministry of Petroleum and Natural Gas and the Department of Expenditure will oversee implementation, claim verification, reconciliation and settlement under the scheme.
The Civil Aviation Ministry said it has been closely monitoring the evolving global situation and remains in regular contact with airlines and other stakeholders to assess operational challenges arising from the ongoing crisis.
The government said the measure is expected to have positive spillover effects on sectors such as tourism, hospitality, trade and exports by ensuring continuity of air connectivity and high-value cargo movement.
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