Cabinet Clears ₹10,000 Cr Fund to Stabilise Jet Fuel

Synopsis: The Union Cabinet approves a ₹10,000 crore ATF Price Stabilisation Fund to protect airlines from fuel price volatility, support affordable air travel, compensate oil companies for under-recoveries, and ensure continuity of aviation services amid global energy market disruptions.

The Union Cabinet has approved a ₹10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to shield Indian airlines from the impact of volatile jet fuel prices amid ongoing geopolitical tensions in West Asia. The one-time budgetary support will be provided to oil marketing companies (OMCs) as interest-free assistance, enabling them to absorb part of the fuel cost burden and maintain moderated ATF prices for domestic carriers.

The decision comes as airlines grapple with rising operating costs driven by elevated global crude oil prices and disruptions in energy supply chains. Jet fuel accounts for nearly 40 percent of an airline’s operating expenses, making ATF price fluctuations a significant challenge for profitability and route viability. The aviation industry had repeatedly sought government intervention as soaring fuel costs threatened to increase airfares and impact connectivity.

Under the new mechanism, the stabilisation fund will compensate OMCs for under-recoveries incurred when ATF is supplied to airlines at moderated rates. The government believes the measure will help ensure continuity of domestic and international air services while preventing sharp fare increases for passengers. Officials stated that the initiative is intended to safeguard the aviation sector from external shocks arising from global conflicts and energy market volatility.

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The fund forms part of a broader package of Cabinet-approved initiatives aimed at supporting key infrastructure and transportation sectors. Industry observers have welcomed the move, noting that airlines have been under severe financial pressure due to fuel costs, currency fluctuations, and operational disruptions linked to regional geopolitical developments.

Recent months have seen the government take several steps to support the aviation industry, including capping ATF price increases and encouraging measures to reduce operational costs. Analysts believe the new stabilisation fund will provide much-needed financial relief to carriers, improve planning certainty, and help maintain affordable air travel for passengers.

The approval underscores the government's commitment to protecting a sector that plays a crucial role in connectivity, tourism, trade, and economic growth. Experts expect the fund to enhance the resilience of India's aviation industry while mitigating the impact of future fuel price shocks.