Air India expressed its appreciation for the Indian Government’s decision to implement an Aviation Turbine Fuel (ATF) Price Stabilisation Fund. The airline characterised this initiative as essential support for the Indian aviation sector. Following the announcement, Air India released a statement on social media thanking relevant ministries for their timely intervention amid rising global aviation fuel prices.

The airline’s statement highlighted the importance of the government’s action, noting that it would enable airlines to serve passengers more effectively. Air India stressed that the measure reflects the Government of India’s commitment to enhancing connectivity across the nation. This comes at a critical time when fluctuations in fuel prices could impact air travel affordability.

Cabinet Approves ₹10,000 Crore Stabilisation Fund

On June 3, the Union Cabinet approved a ₹10,000 crore Price Stabilisation Fund aimed at reducing the financial burden on airlines following surging ATF prices. The Minister of Civil Aviation, Ram Mohan Naidu Kinjarapu, noted that the ongoing crisis in West Asia has significantly influenced aviation fuel costs globally, leading to a sharp increase.

The government’s initiative is designed to mitigate the effects of these price hikes on Indian passengers. By capping the ATF price for domestic operations at Rs 75.60 per litre, the initiative aims to stabilise the aviation sector during a period of global uncertainty. This decision is expected to facilitate smoother operations for airlines and more predictable airfares for consumers.

Union Minister Ashwini Vaishnav clarified that the budgetary support would be allocated to Oil Marketing Companies (OMCs), enabling them to subsidise ATF prices for both domestic and international flights. The comprehensive plan seeks to ensure operational continuity amidst fluctuating fuel costs.

Impact of Increased ATF Prices on Airlines

The dramatic rise in international ATF prices, which reportedly increased from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026, has put significant financial pressure on airlines. ATF constitutes nearly 40 per cent of an airline’s operating costs, and during times of volatile fuel prices, it can account for up to 60 per cent of total operating expenditures.

The price increases are attributed to global instability, particularly in the West Asia region, affecting supply chains and fuel distribution. This volatile environment has prompted airlines to seek ways to manage operational costs without shifting the financial burden onto consumers.

The introduction of the Price Stabilisation Fund is seen as a crucial measure to support the aviation industry during these challenging times. By alleviating the financial strain from rising fuel costs, the government aims to assist airlines in maintaining connectivity and ensuring reliable air travel for passengers across the country.

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