Wednesday, June 3, 2026 – In one of its most consequential economic interventions in months, the Union Cabinet on Wednesday approved a ₹10,000 crore one-time Price Stabilisation Fund for Aviation Turbine Fuel — a direct response to the catastrophic fuel price spike triggered by the ongoing West Asia war. International ATF prices surged from ₹60.50 per litre in March 2026 to ₹142 per litre by May 2026 — a jump of nearly 2.5 times within two months — largely due to the geopolitical crisis in West Asia.
The budgetary support will flow to oil marketing companies as interest-free advances through the Ministry of Petroleum, and under the mechanism, OMCs will be compensated when import parity prices exceed a government-set benchmark. Briefing journalists in New Delhi, Information and Broadcasting Minister Ashwini Vaishnaw described it as a self-sustaining revolving fund that will stabilise ATF prices for scheduled Indian carriers, and said the decision would protect 77 lakh jobs dependent on the aviation ecosystem.
The price stabilisation support will remain in force for 36 months, subject to annual review, or until the advance is fully recovered, whichever comes first. The government may extend the arrangement if the corpus has not been fully settled within that period. The government also cited the closure of Pakistani airspace for Indian carriers, which has resulted in longer flight paths to Europe, North America, and Central Asia, increasing fuel consumption and operating costs significantly.
For passengers, the practical implication is stabilised fares and continued connectivity, particularly to Tier-II and Tier-III cities. For the industry, it is a much-needed buffer after months of haemorrhaging losses. All willing scheduled carriers — domestic and international operations alike — will be eligible.
