US-Iran Conflict: Approval of Rs 10,000 Crore ATF Price Stabilization Fund for OMCs
Amid escalating tensions in the Middle East, the Indian government has established an Aviation Turbine Fuel (ATF) Price Stabilisation Fund to mitigate the impact of soaring fuel prices on airlines and passengers. The Union Cabinet approved a support package of ₹10,000 crore, which will provide interest-free advances to Oil Marketing Companies (OMCs) to help stabilize ATF prices. This initiative comes as international ATF prices have surged 2.5 times, significantly affecting the aviation sector.
Fund Details and Mechanism
The newly created fund will operate as a self-sustaining revolving fund. It aims to compensate OMCs when international ATF prices exceed the benchmark levels set under the scheme. The government intends to prevent sudden spikes in fuel costs that could disrupt airline operations, especially during a period of high volatility in global energy markets.
A fixed-price framework for ATF will be introduced, allowing airlines to better manage their operating costs and financial planning. The scheme will be available to scheduled Indian carriers operating both domestic and international flights. However, the support is not intended to be permanent; once global fuel prices stabilize, the advances to OMCs will be gradually recovered and returned to the Consolidated Fund of India.
Benefits of the Stabilisation Fund
The government has outlined several key benefits of the ATF Price Stabilisation Fund. It aims to stabilize ATF prices for scheduled Indian carriers, prevent disruptions in airline operations, and shield passengers from fare increases driven by global price surges. Additionally, the fund seeks to protect approximately 77 lakh jobs linked to the aviation ecosystem and safeguard public investments in airport infrastructure. The initiative also aims to maintain regional and international connectivity, particularly in light of the closure of Pakistani airspace.
International ATF prices have risen sharply, increasing from ₹60.5 per litre in March 2026 to over ₹142 per litre in May 2026. The government has capped ATF prices at ₹75.6 per litre for domestic operations, as ATF constitutes around 40% of airlines’ operating costs.
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