Cabinet Approves Rs 10,000 Crore ATF Support Package for Domestic Airlines

June 3, 2026

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a one-time budgetary support package of Rs 10,000 crore for Oil Marketing Companies (OMCs) to help stabilize Aviation Turbine Fuel (ATF) prices for scheduled Indian airlines operating domestic and international flights amid the ongoing West Asia crisis.

The support will be provided as interest-free advances to OMCs through the Ministry of Petroleum and Natural Gas. The move is aimed at protecting OMCs from losses caused by sharp fluctuations and elevated ATF prices while ensuring more stable fuel costs for airlines.

ATF Price Stabilization Mechanism for 36 Months

According to the Cabinet decision, the ATF price stabilization support will remain in force for 36 months, subject to annual review or until the entire advance amount is recovered, whichever comes first.

Under the approved mechanism, OMCs will be compensated whenever the prevailing Import Parity Price of ATF exceeds the benchmark price. The support is designed to reduce the impact of volatile global fuel prices on airline operations and provide greater predictability in fuel costs.

The government said that when international ATF prices moderate, the differential amount will be recovered from OMCs and returned to the Consolidated Fund of India.

All Scheduled Indian Airlines Eligible

The scheme will be available to all willing scheduled Indian airlines for both domestic and international operations. Participating airlines will benefit from a fixed-price arrangement that shields them from sudden spikes in fuel prices, enabling better financial and operational planning.

The arrangement will be implemented through a Memorandum of Understanding (MoU) between participating airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas acting as signatories.

As part of the agreement, airlines availing of the scheme will procure ATF exclusively from OMCs for up to three years, subject to annual review or until the advance amount is fully recovered.

Fuel Price Surge Driven by West Asia Crisis 

The government said the measure is expected to provide stability to the aviation sector while also benefiting tourism, hospitality, trade, exports, regional development and investment.

The decision comes at a time when global fuel markets have witnessed significant turbulence due to the ongoing conflict in West Asia. International ATF prices have surged nearly 2.5 times, rising from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026, placing considerable financial pressure on airlines.