Government Implements Price Stabilisation for Aviation Fuel to Support Airlines

The Indian government has introduced a price stabilisation scheme for Aviation Turbine Fuel (ATF), raising prices by 10% to Rs 115 per litre. This initiative aims to shield domestic airlines from global oil price volatility by locking in fuel rates for up to three years. Airlines opting into the scheme will benefit from fixed prices, while those that do not will face market rates, currently around Rs 142 per litre. With ATF accounting for a significant portion of airline operating expenses, this move is expected to impact fare pricing and overall airline stability. Experts are watching closely to see if this will effectively minimize costs for passengers.

By Narendra Chaudhary Jun 10, 2026, 15:49 IST

New Price Stabilisation Scheme for Aviation Fuel

The price of Aviation Turbine Fuel (ATF) has seen an increase of approximately 10%, as state-owned oil companies introduce a price stabilisation initiative. This program aims to provide domestic airlines with a fixed fuel rate for a period of up to three years, thereby protecting both carriers and passengers from volatile global oil price fluctuations. According to industry sources, the new cost for jet fuel will be Rs 115 per litre, rising from Rs 104.927.

Airlines that choose to participate in this government-supported price stabilisation scheme will benefit from the locked-in price of Rs 115 per litre. In contrast, those that opt out will be subject to market rates, which are currently around Rs 142 per litre, similar to what international airlines pay. While participating airlines will be shielded from global price changes, non-participating carriers may experience lower costs during price drops but will also face higher expenses when international rates increase.

ATF constitutes about 40% of an airline's operating costs, and this figure can escalate to 60% during periods of significant price volatility. Reports indicate that international jet fuel prices surged to Rs 142 per litre in May, up from pre-war levels of Rs 60.50 per litre, raising alarms about the impact on airline operating expenses and potential fare hikes. Experts suggest that this new framework is designed to mitigate fuel price volatility while ensuring proper oversight and recovery of funds. The key question remains whether this initiative will effectively reduce the financial burden on passengers and stabilize airfares.