India Approves ₹10,000 Crore ATF Stabilisation Fund to Cushion Aviation from Fuel Volatility

New Delhi, June 4, 2026 The Government of India has approved a ₹10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund, aimed at supporting domestic airlines facing rising operational costs due to volatile global fuel prices and geopolitical disruptions.

The decision was cleared by the Union Cabinet chaired by Prime Minister Narendra Modi, as confirmed in official government briefings. The fund is designed to stabilise aviation fuel pricing through a structured financial mechanism involving state-run oil marketing companies.

Under the approved framework, the government will provide a ₹10,000 crore interest-free support line to Oil Marketing Companies (IOCL, BPCL, and HPCL). These companies will supply ATF to airlines at stabilised rates, while the difference between market fluctuations and stable pricing will be managed through a revolving adjustment system.

Officials noted that ATF accounts for nearly 35–40% of total airline operating costs, making fuel volatility one of the biggest risks for airline profitability. Recent global crude oil fluctuations, coupled with supply chain disruptions and rerouting of international air corridors, have significantly increased fuel consumption and cost pressure across carriers.

From a B2B aviation perspective, the move is expected to provide immediate cost predictability for airlines such as IndiGo, Air India, Akasa Air, and SpiceJet. Industry stakeholders anticipate improved route planning confidence, reduced fare volatility, and better capacity planning for both domestic and international operations.

Oil marketing companies will also benefit from structured government-backed compensation, reducing exposure to sudden under-recoveries caused by global price spikes.

Aviation analysts view this as a stabilisation policy rather than a subsidy, aimed at ensuring continuity in India’s rapidly growing aviation sector, which remains one of the fastest-expanding markets globally.

Overall, the fund is expected to strengthen operational resilience across the aviation value chain covering airlines, fuel suppliers, airports, and travel partners—while ensuring more predictable conditions for business and corporate travel demand.