To assist scheduled Indian airlines in stabilising Aviation Turbine Fuel (ATF) costs in the face of persistent volatility in global energy markets, the Union Cabinet, headed by Prime Minister Narendra Modi, has sanctioned a one-time budgetary assistance package for Oil Marketing Companies (OMCs) worth ₹10,000 crore.
The goal of the assistance is to prevent airlines and OMCs from suffering financially as a result of the West Asia crisis-induced spikes in fuel prices and the subsequent increases in international ATF pricing.
As per the structure that has been agreed, the Ministry of Petroleum and Natural Gas will be the one to grant interest-free loans to OMCs up to 10,000 crore. Up to 36 months, or until the full amount of support is collected and settled, the help will be operational, subject to annual review.
When the authorised pricing structure establishes a benchmark level for international ATF prices, the mechanism will reimburse OMCs whenever the benchmark level is exceeded, as per the Cabinet decision. The surplus support amount will be recouped from OMCs and transferred back to the Consolidated Fund of India as soon as fuel prices around the world start to fall.
All participating scheduled Indian airlines would be able to use the plan for both local and international flights, making fuel prices more predictable and protecting them from unexpected spikes.
Airlines, OMCs, the Civil Aviation Ministry, and the Petroleum and Natural Gas Ministry will all sign a tripartite MoU to put the plan into action.
Participating airlines will be required to get all of their ATF from OMCs for a maximum of three years, with yearly reviews and recovery requirements.
At a time when fuel expenses make up a significant portion of airline operating costs, the government hopes that this step would help airlines enhance their financial planning and operational stability.
Stable aviation fuel costs, according to officials, might encourage expansion in the hospitality, tourism, trade, exports, regional connectivity, investment, and tourism industries, among others.
The decision is made in light of the fact that aircraft fuel prices have recently risen sharply around the world. Prices of international ATF have almost quadrupled, rising from around ₹60.50 per litre in March 2026 to about ₹142 per litre in May 2026, as a result of problems associated with the continuing crisis in West Asia.
According to the Cabinet, this action shows the government’s dedication to helping the aviation industry during this time of uncertain global energy markets by maintaining air connectivity and economic activity.
Image: The Financial Express
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