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Informist, Tuesday, Jun. 9, 2026

 

MUMBAI – The government's recently approved price stabilisation support of INR 100 billion for aviation turbine fuel to oil marketing companies is likely to help Indian airlines cushion the impact of higher fuel costs, Crisil Intelligence said in a report. The support will ensure stability in aviation turbine fuel prices for domestic airline companies by offsetting the impact of global volatility in crude oil prices, the research analyst agency said.

 

The government capped the price of aviation turbine fuel at INR 75.60 per litre for domestic operations after a meeting of the Union Cabinet Wednesday. "This is timely for airlines grappling with the West Asia crisis, because fuel is the single-largest operating expense for them," Crisil said. The government's intervention will provide support to downstream oil companies from oil price shocks, in turn preventing a rise in aviation turbine fuel prices. This will help both airlines' profitability and fare stability, according to Crisil.

 

Based on the current aviation turbine fuel rates of INR 105 per litre domestically and INR 142 per litre for international operations, Crisil expects the fixed price mechanism to provide support of around INR 45 per litre. According to the average monthly consumption of aviation turbine fuel in the financial year ended Mar. 31, the price stabilisation fund is expected to last for more than two months, the agency noted.

 

"While the ATF price cap protects airlines from sharp increases in fuel costs, it could also limit the benefits of a decline in global oil prices," Crisil noted. As per the scheme, the support fund will continue until the entire support extended to oil marketing companies is fully recovered and settled. If international aviation turbine fuel prices fall below the benchmark, then the airline companies may not immediately benefit from lower rates. This is because parts of the gains will be used to recover support provided to oil companies, the agency said.

 

Crisil also stressed that passengers would be key beneficiaries of the government's support to airline carriers. Historically, airline companies have responded to higher fuel costs by raising ticket rates, levying fuel surcharges, or reducing promotional pricing. "By helping stabilise fuel prices, the fund could moderate airfare inflation and support travel demand, particularly among price-sensitive leisure travellers," Crisil Intelligence said. It added that the fund does not entirely exclude airline companies' exposure to global crude oil price movements but simply acts as a buffer against the energy shock.  End

 

Reported by Adhithya Aji

Edited by Rajeev Pai

 

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