The Union Cabinet has approved a Rs 10,000 crore ATF stabilisation fund to shield India’s aviation sector from the impact of rapidly rising jet fuel prices, providing a significant boost to airlines, passengers and the broader aviation ecosystem. The announcement comes as aviation turbine fuel costs have surged sharply in recent months due to geopolitical tensions in West Asia, placing enormous financial pressure on carriers and oil marketing companies.
Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the ATF stabilisation fund was designed to mitigate the impact of exceptional fuel price volatility and ensure uninterrupted airline operations. The government has simultaneously capped aviation turbine fuel prices at Rs 75.6 per litre for domestic airline operations, a move aimed at preventing a further escalation in operating costs.
The ATF stabilisation fund is expected to play a crucial role in maintaining stability across the aviation sector, particularly at a time when airlines are grappling with soaring fuel expenses and increased operational challenges.
Rising jet fuel prices trigger government intervention
The Cabinet’s decision follows a dramatic increase in aviation fuel prices linked to ongoing instability in West Asia. According to the government, aviation turbine fuel prices climbed from approximately Rs 60.5 per litre in March 2026 to Rs 142 per litre in May 2026, representing an increase of nearly 2.5 times within a short period.
Such a steep rise in jet fuel prices has significantly affected airline profitability because aviation turbine fuel remains one of the largest expenses for carriers. Industry experts estimate that fuel accounts for nearly 40 per cent of total airline operating costs, making fuel price fluctuations a major factor influencing airline finances and passenger fares.
The ATF stabilisation fund has therefore been positioned as an emergency measure to prevent severe disruptions to airline operations while supporting the broader aviation sector during a period of global uncertainty.
How the ATF stabilisation fund will support airlines
Government officials stated that the ATF stabilisation fund would provide financial support to oil marketing companies, enabling them to maintain stable aviation fuel pricing for scheduled Indian airlines despite ongoing market volatility.
The support mechanism is expected to remain operational for 36 months, subject to annual reviews or until the assistance amount is fully recovered or settled. The objective is to ensure that airlines continue functioning efficiently without passing the full burden of rising fuel costs onto passengers.
According to the government, the ATF stabilisation fund will help prevent major airfare increases that could otherwise occur due to escalating global energy prices. By cushioning airlines from extreme fuel cost shocks, authorities aim to preserve affordability for travellers while maintaining connectivity across domestic and international routes.
Protecting jobs and aviation infrastructure
Beyond supporting airlines, the government believes the ATF stabilisation fund will safeguard millions of livelihoods connected to the aviation industry. Officials indicated that approximately 77 lakh jobs depend directly or indirectly on the aviation ecosystem, including airport operations, ground handling services, maintenance providers, tourism businesses and logistics networks.
Aviation analysts note that protecting airline viability also helps preserve substantial public and private investments made in airport infrastructure over the past decade. India’s rapidly expanding aviation market has witnessed significant investments in airport modernisation, regional connectivity projects and international aviation hubs, making operational continuity a critical policy priority.
Experts further suggest that stabilising aviation fuel prices during periods of geopolitical uncertainty can help maintain investor confidence in the sector and reduce financial risks for carriers already facing higher operational expenses.
Connectivity remains a key concern
The government also highlighted the importance of preserving connectivity amid evolving regional challenges. Officials said the ATF stabilisation fund would help maintain both regional and international air links, particularly to destinations across Europe, North America and Central Asia.
Industry observers point out that maintaining stable airline operations has become increasingly important following disruptions caused by the closure of Pakistani airspace, which has altered flight routes and increased operational costs for several carriers.
By supporting airlines through the ATF stabilisation fund, policymakers aim to ensure that passengers continue to have access to reliable air travel services despite mounting global pressures on fuel markets.
What the decision means for the aviation sector
The approval of the ATF stabilisation fund represents one of the most significant interventions in India’s aviation sector in recent years. With jet fuel prices remaining elevated and geopolitical risks continuing to influence global energy markets, the fund is expected to provide much-needed stability for airlines, oil marketing companies and passengers.
While aviation experts caution that long-term solutions will require structural improvements in fuel taxation, operational efficiency and energy diversification, they generally view the ATF stabilisation fund as a timely measure that could help prevent severe financial strain across the industry.
As airlines navigate an increasingly challenging global environment, the government’s intervention is expected to cushion the impact of rising aviation fuel prices, support employment, maintain connectivity and reduce the risk of sudden airfare increases for millions of travellers.