New Delhi: The Union Government has unveiled a ₹10,000 crore Aviation Turbine Fuel (ATF) stabilisation mechanism aimed at protecting Indian airlines from sharp fluctuations in jet fuel prices caused by ongoing geopolitical tensions in West Asia. While the move is expected to provide greater cost certainty for airlines, passengers should not expect an immediate reduction in airfares.
Under the scheme, participating Indian carriers will be allowed to purchase jet fuel at fixed benchmark rates for both domestic and international operations. The benchmark price has been set at ₹86.32 per litre for domestic flights and ₹104.49 per litre for international operations.
After adding airport charges, taxes, oil company margins and other levies, the effective ATF price will vary across cities. Current estimates place the selling price at approximately ₹115 per litre in Delhi, ₹114.50 per litre in Mumbai and ₹139 per litre in Chennai. Airlines that choose not to participate in the scheme will continue to pay market linked rates, which are currently around ₹142 per litre.
The initiative comes in response to dramatic increases in global jet fuel prices. Officials noted that international ATF prices climbed from around ₹60.50 per litre in March to nearly ₹142 per litre in recent weeks. Since fuel typically accounts for about 40 per cent of an airline’s operating expenses, such volatility has significantly increased financial pressure on carriers.
Indian airlines have also faced rising costs due to longer international flight routes following restrictions linked to Pakistan’s airspace, while instability in West Asia has further complicated operations and fuel planning.
Despite the scheme, authorities clarified that travellers should view the measure primarily as a fare stabilisation mechanism rather than a fare reduction programme. The objective is to prevent airlines from passing sudden fuel cost spikes directly on to passengers through steep fare hikes or fuel surcharges.
To support the mechanism, the government will provide a one time interest free advance of up to ₹10,000 crore to public sector oil marketing companies. The arrangement is designed to be self correcting, with funds recovered once fuel prices moderate.
The scheme will remain operational for up to 36 months or until the full amount advanced by the government has been recovered, whichever occurs earlier. For passengers, the biggest benefit is likely to be more predictable airfare pricing during periods of global energy market volatility.
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