ATF Price Stabilization Fund: Rs. 10,000 Crore Approved
Why in the news
The West Asia crisis pushed jet fuel prices sharply up, so the Union Cabinet approved a one-off support package to cushion airlines and fuel retailers and protect fares and air connectivity.
Key facts
- Fund: ATF Price Stabilization Fund, for jet fuel (Aviation Turbine Fuel).
- Money: a single, interest-free budget allocation of as much as ₹10,000 crore.
- Routing: Petroleum and Natural Gas Ministry’s Demands for Grants.
- Price spike: global ATF rates went up about 2.5 times, from ₹60.50 a litre in March 2026 to ₹142 a litre by May 2026.
- Beneficiaries: all willing Scheduled Indian Airlines, on domestic and international routes.
Objectives
- Bring price stability and predictability to airline fuel purchases.
- Protect airlines and oil marketing companies (OMCs) from heavy losses caused by wild global price swings.
- Keep air connectivity intact and passenger fares stable.
How the fund works
| Feature | Mechanism |
|---|---|
| Advance to OMCs | Interest-free money, capped at ₹10,000 crore, covering OMC losses whenever the global Import Parity Price (IPP) is above the benchmark set for the fund |
| Recovery (true-up) | Once ATF drops under the threshold, the gap is collected from OMCs and credited back to the Consolidated Fund of India, continuing until the advance is repaid fully |
| Pricing for airlines | Fixed-price arrangement removes daily volatility |
| Sourcing condition | Under an MoU, airlines agree to purchase ATF only through the OMCs taking part, for a period of up to 3 years |
Governance
- The MoU is signed by the airlines and OMCs that take part along with the civil aviation and petroleum ministries.
- A Monitoring Committee draws on three bodies: civil aviation, petroleum and natural gas, and the Department of Expenditure.
Exam angle
- Cabinet-approved fund; one-time support up to ₹10,000 crore; trigger was the West Asia crisis.
- Related terms: Import Parity Price, true-up, OMC, Scheduled Indian Airlines.
- It is a recoverable advance with a repayment mechanism, not a permanent price subsidy.