The Central Government has taken an important decision for the aviation sector to mitigate the impact of the rise in global fuel prices. The Union Cabinet, which met under the chairmanship of Prime Minister Narendra Modi on Wednesday, approved providing one-time financial assistance of Rs 10,000 crore to oil marketing companies (OMCs). This decision has been taken with the aim of mitigating the impact of increased and volatile fuel prices due to the ongoing crisis in West Asia.
According to the official statement, this assistance will be provided in the form of interest-free advances to oil marketing companies through the Demands for Grants of the Ministry of Petroleum and Natural Gas. Its objective is to protect OMCs from losses arising from rising and volatile prices of aviation fuel i.e. Aviation Turbine Fuel (ATF).
The ‘ATF Price Stabilization Support’ scheme will be in force for 36 months. However, this will be reviewed every year or will continue until the entire advance assistance amount is recovered and adjusted.
The government statement said that this assistance is being provided to provide ATF at relatively stable rates to the airlines in the current extraordinary fuel price rise situation. According to the decision of the Cabinet, if the Import Parity Price (IPP) of ATF in the international market goes above the prescribed standards, then the loss due to it will be compensated from this fund.
The government has clarified that when international ATF prices come down, the amount due from oil marketing companies will be recovered and deposited in the Consolidated Fund of India. This arrangement will continue until the entire assistance amount is recovered.
The scheme will be available to all interested scheduled Indian airlines and will be applicable on both domestic and international flights.
Under the new system, airlines will get more stability in fuel costs and will be able to make better estimates of future expenses. This is expected to provide considerable relief from the risk of sudden increase in fuel prices.
A Memorandum of Understanding (MoU) will be signed between the participating aviation companies and oil marketing companies for the implementation of the scheme. This agreement will also be signed by the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas.
Airlines covered under this special arrangement will have to purchase ATF only from OMCs for a maximum of three years. However, this provision will also be reviewed every year or the scheme will be terminated after full recovery of the assistance amount.
The Government believes that this scheme will help airlines manage fuel costs more effectively and bring greater stability in their operations and financial planning. It is also expected to have a positive impact on sectors like tourism, hotel industry, trade, exports, regional development and investment.
According to government data, the ongoing conflict in West Asia has led to a sharp increase in international ATF prices. The price of ATF was around Rs 60.50 per liter in March 2026, which increased to Rs 142 per liter by May 2026. That is, in just two months the price increased almost two and a half times, due to which there is huge pressure on the costs of aviation companies.
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