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Category — GS Paper 3 ///Published — 2026-06-05 ///Exam — Both Prelims and Mains ///Tags — Aviation, Indian Economy, Government Policy ///Category — GS Paper 3 ///Published — 2026-06-05 ///Exam — Both Prelims and Mains ///Tags — Aviation, Indian Economy, Government Policy ///

News · GS Paper 3

Cabinet Approves Rs 10,000 Crore ATF Price Stabilisation Fund

The Union Cabinet has approved a one-time Rs 10,000 crore budgetary support to public sector oil marketing companies (OMCs) to stabilise aviation turbine fuel (ATF) prices for Indian airlines. The fund aims to protect domestic carriers from volatile global fuel prices caused by the West Asia conflict, with the arrangement lasting three years through agreements between OMCs and Indian airlines.

2026-06-05

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Key Highlights

Budgetary Support

Union Cabinet approved Rs 10,000 crore one-time budgetary support
Funds will be provided to public sector OMCs (Oil Marketing Companies)
Objective: Stabilise aviation turbine fuel (ATF) prices for Indian airlines

Background

Elevated global fuel prices due to West Asia conflict
Both domestic and international airline operations affected
Need to provide relief to Indian carriers facing high operational costs

Aviation Turbine Fuel (ATF) Overview

Definition: Specialised fuel used in aircraft powered by gas-turbine engines
Cost Significance: Accounts for nearly 40% of airline operating costs
Impact: Fuel-price volatility is a major concern for the aviation sector

Implementation Details

Duration

Arrangement will be in place for three years

Mechanism

Agreements between OMCs and Indian airlines
Airlines required to procure ATF exclusively from OMCs
Subject to annual review or full recovery of advance, whichever is earlier

Price Stabilisation Fund

Provides predictable, fixed-price ATF supply
Reduces airlines' exposure to sudden international fuel price spikes
OMCs compensated for losses when international ATF prices exceed benchmark
Recoveries returned to Consolidated Fund of India when prices moderate

Eligibility Criteria

Facility only for Indian carriers
Foreign airlines excluded
Ensures targeted relief for domestic operators

Monitoring Mechanism

Representatives from:

Ministry of Civil Aviation
Ministry of Petroleum and Natural Gas
Department of Expenditure

Functions:

Oversee implementation
Claim verification
Reconciliation and settlement

Significance

Moderate airfares for passengers
Ensure continuity of domestic and international flights
Provide operational predictability for airlines
Protect OMCs from losses due to extreme fuel price volatility
Boost competitiveness of Indian aviation sector

Related Development

India has expanded the definition of ATF to include Sustainable Aviation Fuel (SAF) and blended ATF, aligning with global aviation sustainability trends.