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Informist, Thursday, Jun. 4, 2026

--Govt: The ATF price stabilisation fund is one-time, no extension 

--CONTEXT: Government officials briefing media on West Asia war 

--Govt: ATF stabilisation fund to be operational soon 

NEW DELHI – The Centre will soon operationalise the INR-100-billion fund approved by the Cabinet to stabilise aviation turbine fuel prices for oil marketing companies to support Indian airlines and protect consumers, Ministry of Civil Aviation Director Rohit Raj said, without detailing the timeline, as it is subject to agreements between airlines and oil marketing companies. 

The government on Wednesday capped aviation turbine fuel prices at INR 75.62 per litre for domestic flights and INR 104.49 for international flights to curb the undue rise in fuel costs arising from the disruptions in West Asia. These base prices exclude excise, value-added tax, airport charges, and other charges. 

"We are fixing (base price) it at FOB (freight on board) level...where there is no incidence of VAT, central excise, and other charges," the director said in a media briefing on developments related to the West Asia crisis. Since the war broke out, international aviation turbine fuel prices have surged nearly 2.5 times – from INR 60.50 per litre in March 2026 to INR 142 per litre in May 2026. Jet fuel cost accounts for nearly 40% of an airline's operating cost, and during periods of extreme fuel volatility, it can constitute up to 60% of total operating expenditure. 

The director also pointed out that airlines are not mandated to avail support under the scheme and can choose to enter into agreements with oil companies as per their convenience. "They can do it as a combined MOU (with all oil marketing companies) or a separate MOU (with each oil marketing company). So, if it's a commercial arrangement, the Ministry of Civil Aviation will not interfere in that. So that's the choice the airline has. Under this scheme, only billing airlines are allowed. If somebody is not willing to avail this scheme, that is also available." 

The airlines availing support under the scheme will procure aviation fuel only from oil marketing companies for up to three years, subject to annual review or until the advance amount is fully recovered, whichever is earlier, the government said in a release Wednesday. 

Under the price stabilisaton support scheme, the government will compensate oil marketing companies for losses incurred while selling aviation fuel at fixed prices to airlines, despite the prevailing import parity price exceeding the fixed price determined under the approved mechanism. The fund will be recovered from oil marketing companies when international ATF prices moderate. 

"So, as soon as the fund is operationalised, OMCs are reimbursed their losses, and once the prices stabilise, the OMC will pay back the fund to the Consolidated Fund of India," the director said. "Once turning up happens, this whole scheme will end, and there won't be any extension of it," he added. 

Asked if the base price or benchmark price will be revised from time to time, the director said it would remain fixed. "This whole arrangement is a temporary one-time measure, and there is nothing in that scheme that allows us to revise the benchmark prices."  End

Reported by Afra Abubacker

Edited by Avishek Dutta

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