The Union cabinet on Wednesday approved a ₹10,000-crore fuel price stabilisation programme for airlines, aimed at providing stability in jet fuel pricing for domestic carriers affected by volatility triggered by the West Asia crisis.
Under the scheme, the government will extend one-time budgetary support of up to ₹10,000 crore as an interest-free advance to oil marketing companies (OMCs).
This funding will be used to support aviation turbine fuel (ATF) price stabilisation for scheduled Indian airlines, according to an official statement.
The assistance is intended to help stabilise ATF prices during a period of exceptional volatility in global fuel markets arising from the ongoing West Asia crisis.
Briefing reporters on the cabinet decision, information and broadcasting minister Ashwini Vaishnaw said, “We are all aware that the crisis in West Asia has led to a major challenge. The price of ATF has risen sharply. The government wanted to ensure that this increase did not place an undue burden on domestic passengers.”
He noted that air travel has become an essential mode of transport for the middle class, with many families now travelling regularly by air.
“To protect consumers from steep fare increases, the government had capped ATF prices for domestic operations at ₹75.60 per litre. While this measure helped stabilise domestic airline operations, the prolonged crisis began to have a significant negative impact on oil marketing companies (OMCs),” the minister said.
Vaishnaw also said the fund is expected to help offset the impact of restrictions arising from the closure of Pakistani airspace. He explained that Indian carriers operating international routes have often been forced to take longer flight paths, resulting in higher operational costs and reduced connectivity.
The proposed mechanism will ensure greater stability and predictability in ATF pricing for Indian airlines, enabling better operational and financial planning.
It will also protect OMCs from losses arising due to volatile and elevated ATF prices during the ongoing West Asia crisis. In addition, the scheme is expected to reduce the pass-through of fuel price shocks to passengers, thereby helping moderate airfares and fare volatility, the government added.