Context: Cabinet Approves ₹10,000 Crore ATF Price Stabilisation Fund
Amid the ongoing West Asia crisis, global crude oil and Aviation Turbine Fuel prices have surged sharply, increasing airline operating costs and raising the risk of fare hikes and service disruptions. To cushion airlines from these shocks, the Union Cabinet approved a ₹10,000 crore ATF Price Stabilisation Fund.
ATF Price Stabilisation Fund
Aviation Turbine Fuel
- Jet fuel used by aircraft.
- It is the single largest operating expense for airlines.
- It accounts for nearly 40% of operating costs under normal conditions.
- It can account for up to 60% of operating expenditure during periods of extreme price volatility.
- Fluctuations in ATF prices directly affect airfares, airline profitability, route planning, and connectivity.
Fund Mechanism
- ₹10,000 crore one-time budgetary support.
- Interest-free advances to Oil Marketing Companies.
- OMCs supply ATF at moderated prices to scheduled airlines.
- Support is recovered after international fuel prices stabilise.
- The fund works like a self-sustaining revolving fund.
Expected Benefits
- Stabilises fuel costs.
- Prevents fare spikes and flight disruptions.
- Improves financial viability of airlines.
- Protects passengers and cargo operations.
- Strengthens resilience of India’s aviation sector.
