Amid volatile fuel prices due to tensions in the Middle East, the government on Wednesday approved a one-time budgetary support of Rs 10,000 crore for oil marketing companies (OMCs) to provide price stabilisation for aviation turbine fuel (ATF) to Indian airlines for domestic and international operations. The decision was taken by the Union Cabinet, chaired by Prime Minister Narendra Modi. Sharing the details of the meeting, Union Minister Ashwini Vaishnaw said the budgetary support shall be in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas.
Price stabilisation support for thirty-six months
According to the information shared, the ATF price stabilisation support will be in force for 36 months. "There is a provision for annual review or until the advance amount is fully recovered/settled, whichever is earlier. The proposal may be extended beyond thirty-six months with the approval of the Competent Authority in case the corpus is not fully trued up within this period," the government said.
What it means for airlines and passengers
The move will provide enhanced stability and predictability in ATF pricing for Indian airlines, enabling better operational and financial planning. Moreover, it will reduce the pass-through of fuel price shocks to passengers, thereby helping to moderate fare volatility.
The arrangement will support continued air connectivity to remote, regional, Tier-II and Tier-III cities, promoting balanced regional development and inclusive growth.
It will shield Oil Marketing Companies (OMCs) from losses arising from volatile and elevated ATF prices during the ongoing West Asia crisis.
Key benefits
- Stable airline operations help sustain employment across airlines, airports, ground handling agencies, MROs, travel agencies, hospitality and logistics sectors.
- Continued air connectivity will facilitate the movement of passengers, high-value cargo, business travellers and tourists, thereby supporting economic activity across sectors.
- The measure will have positive spill-over effects on tourism, hospitality, trade, exports, regional development and investment.
- It will help ensure optimum utilisation of airport infrastructure developed across the country, including airports operationalised under the UDAN scheme.
- By preserving domestic and international connectivity, the initiative will strengthen India's integration with global markets and support long-term economic growth.
