The Union Cabinet has approved a ₹10,000-crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to protect Indian airlines from sharp increases in jet fuel prices triggered by geopolitical tensions in West Asia.
The decision comes as airlines face rising operating costs due to volatility in global crude oil markets. Aviation fuel is one of the biggest expenses for carriers and typically accounts for 35-40% of their operating costs. Recent concerns over supply disruptions and escalating tensions in the Middle East have pushed energy prices higher, increasing pressure on airline finances.
Under the new mechanism, the government will provide temporary financial support when ATF prices rise sharply beyond a predetermined threshold. The fund is designed to reduce the impact of sudden fuel price spikes and help airlines maintain operations without passing the entire burden on to passengers.
Officials said the measure aims to ensure stability in the aviation sector, which has witnessed strong growth in passenger traffic over the past few years. The fund is expected to benefit both full-service and low-cost carriers by providing a buffer against external shocks.
The government believes the initiative will support the long-term growth of India’s aviation sector while safeguarding connectivity and passenger demand. The fund is expected to become operational after detailed implementation guidelines are finalised.
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