₹10,000-crore support for aviation fuel: Will airfares stabilise after govt help?
The amount given will compensate OMCs for losses due to elevated international ATF prices.
- Jun 3, 2026,
- Updated Jun 3, 2026 4:00 PM IST
The government has announced a one-time budgetary support of ₹10,000 crore for oil marketing companies (OMCs) to provide stabilisation of aviation turbine fuel (ATF) for both domestic and international operations. The Cabinet decided to give the support in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas.
The amount given will compensate OMCs for losses due to elevated international ATF prices. The price stabilisation will be in force for a period of 36 months with provision for annual review. With the approval of the competent authority, the proposal might be extended beyond 36 months too.
“When international ATF prices moderate, the differential amount shall be recovered from OMCs and returned to the Consolidated Fund of India. The arrangement shall continue until the entire support amount is fully recovered and settled,” the government said.
MUST READ | Delhi slashes ATF VAT from 25% to 7% amid rising aviation costs, airfare concerns
WILL IT IMPACT AIRFARES?
The government said the amount will reduce pass-through of fuel price shocks to passengers, and moderate fare volatility. It aims to enhance stability and predictability of ATF pricing in Indian airlines.
Not only passengers, OMCs are also expected to be shielded from the volatile and elevated ATF prices, which are the results of the West Asia crisis.
This stability will protect and sustain international as well as domestic air connectivity, including connectivity to remote, regional, Tier-II and Tier-III cities. This will ensure movement of passengers, cargo, business travellers as well as tourists. The government said it will have a positive spillover effect on tourism, hospitality, trade, exports, regional development and investment.
Stable airline operations will help sustain employment across airlines, airports, ground handling agencies, MROs, travel agencies, hospitality and logistics sectors, the government said.
The government has announced a one-time budgetary support of ₹10,000 crore for oil marketing companies (OMCs) to provide stabilisation of aviation turbine fuel (ATF) for both domestic and international operations. The Cabinet decided to give the support in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas.
The amount given will compensate OMCs for losses due to elevated international ATF prices. The price stabilisation will be in force for a period of 36 months with provision for annual review. With the approval of the competent authority, the proposal might be extended beyond 36 months too.
“When international ATF prices moderate, the differential amount shall be recovered from OMCs and returned to the Consolidated Fund of India. The arrangement shall continue until the entire support amount is fully recovered and settled,” the government said.
MUST READ | Delhi slashes ATF VAT from 25% to 7% amid rising aviation costs, airfare concerns
WILL IT IMPACT AIRFARES?
The government said the amount will reduce pass-through of fuel price shocks to passengers, and moderate fare volatility. It aims to enhance stability and predictability of ATF pricing in Indian airlines.
Not only passengers, OMCs are also expected to be shielded from the volatile and elevated ATF prices, which are the results of the West Asia crisis.
This stability will protect and sustain international as well as domestic air connectivity, including connectivity to remote, regional, Tier-II and Tier-III cities. This will ensure movement of passengers, cargo, business travellers as well as tourists. The government said it will have a positive spillover effect on tourism, hospitality, trade, exports, regional development and investment.
Stable airline operations will help sustain employment across airlines, airports, ground handling agencies, MROs, travel agencies, hospitality and logistics sectors, the government said.