Government allocates ₹10,000 crore for aviation fuel prices

On 3 June 2026, the Union Cabinet approved a one-time budgetary support of up to ₹10,000 crore for Oil Marketing Companies to stabilise Aviation Turbine Fuel prices for scheduled Indian airlines. The support will be given as interest-free advances through the Ministry of Petroleum and Natural Gas for domestic and international flight operations.

Aviation Turbine Fuel

Aviation Turbine Fuel, or ATF, is the jet fuel used in turbine-powered aircraft. In India, ATF prices are a major operating cost for airlines, and domestic airline operations have been capped at ₹75.6 per litre under the latest arrangement.

Price volatility and fuel mechanism

The decision follows sharp volatility in international ATF prices during the West Asia crisis. The price rose from ₹60.5 per litre in March 2026 to ₹142 per litre in May 2026, which is about 2.5 times higher. The fund is designed as a self-sustaining revolving fund with a fixed-price ATF mechanism for 36 months.

Implementation framework

A Monitoring Committee will oversee the fund. The committee includes representatives from the Ministry of Civil Aviation, the Ministry of Petroleum and Natural Gas, and the Department of Expenditure.

Related institutional and sectoral facts

Oil Marketing Companies in India include public sector firms that market petroleum products and aviation fuel. Scheduled Indian airlines operate regular passenger services under approved flight schedules and use ATF for both domestic and international routes.

Important Facts for Exams

• Aviation Turbine Fuel is a key input cost for airlines and is priced separately from petrol and diesel in India.
• The Ministry of Petroleum and Natural Gas handles petroleum policy and fuel-related administrative matters in India.
• The Emergency Credit Line Guarantee Scheme, or ECLGS, was used earlier for sectoral financial support.
• The aviation ecosystem includes airlines, airports, ground handling, maintenance, and related service providers.

The aviation sector in India is regulated by the Ministry of Civil Aviation. The latest support package is linked to scheduled Indian airlines and ATF price stability for 36 months.