Jet fuel crisis: Cabinet clears Rs 10,000 crore ATF fund to shield airlines and passengers from fuel price shock
Union Cabinet has approved a Rs 10,000 crore ATF Price Stabilisation Fund to support airlines amid soaring jet fuel prices. The move aims to control airfares, protect jobs and ensure uninterrupted flight operations
Jet fuel crisis: The Union Cabinet has approved a Rs 10,000 crore Aviation Turbine Fuel (ATF) Price Stabilisation Fund to support the aviation industry amid a sharp rise in global fuel prices.
The decision comes at a time when tensions in West Asia have pushed up international fuel costs, increasing financial pressure on airlines across the world. According to government data, international ATF prices rose nearly 2.5 times between March and May 2026. In India, jet fuel prices climbed from Rs 60.5 per litre in March to Rs 142 per litre in May.
To provide immediate relief to airlines, the government has capped ATF prices for domestic flight operations at Rs 75.6 per litre.
Fuel remains one of the largest expenses for airlines, accounting for around 40 per cent of their operating costs. The steep rise in prices has affected both airline operators and Oil Marketing Companies (OMCs), prompting the government to intervene.
Under the newly approved scheme, the Rs 10,000 crore fund will be used to stabilise fuel prices for Indian carriers operating domestic as well as international flights. The fund has been structured as a revolving mechanism, allowing it to remain operational and sustainable over the long term.
The government said the initiative will help airlines manage sudden spikes in fuel costs and ensure uninterrupted flight operations despite fluctuations in global energy markets.
The measure is also expected to reduce the burden on passengers by preventing steep increases in airfares that could result from higher fuel expenses.
Officials said the fund would help protect nearly 77 lakh jobs linked to India's aviation sector. It is also expected to safeguard investments made in airport infrastructure by ensuring that airlines continue to operate viably during periods of elevated fuel prices.
The move is likely to support regional, domestic and international connectivity, including key routes to Europe, North America and Central Asia, at a time when airlines continue to face operational challenges due to the closure of Pakistan's airspace.