The central government has unveiled a voluntary price-stabilisation scheme for aviation turbine fuel (ATF) to support India’s domestic aviation sector and blunt the impact of international fuel price spikes, officials said. Under the plan, domestic carriers can opt to lock in ATF at a fixed rate for the next three years, shielding them from short-term volatility in global markets. The announcement comes as state fuel retailers have simultaneously raised ATF prices by roughly 10 percent.
Government sources say participation in the scheme is optional. Airlines that choose to join will pay ₹115 per litre for ATF — up from an earlier reference level of ₹104.927 per litre — while carriers that remain outside the arrangement will continue to buy at prevailing market rates, currently about ₹142 per litre. International carriers are also purchasing fuel at the same market price, the sources added.
The scheme uses a “free-on-board” (FOB) benchmark set at ₹86.32 per litre. That benchmark, the government says, factors in airport levies, oil companies’ margins and applicable taxes. Using this formula, the effective ATF rates under the mechanism work out to around ₹115/litre in Delhi, ₹114.5/litre in Mumbai and ₹139/litre in Chennai.
Fuel prices rose earlier this year after conflict erupted in West Asia, pushing up global crude and refined fuel costs. Domestic ATF in Delhi had been stable near ₹105 per litre for more than two months, but subsequent international increases forced state oil companies to absorb substantial losses after the government chose not to pass the full burden onto consumers.
To compensate those losses and to insulate the aviation industry from future shocks, the Union Cabinet has approved a ₹10,000 crore price-stabilisation fund. Under the scheme’s mechanism, when the international benchmark exceeds the ₹86.32/litre reference, the government will provide interest-free advances to oil marketing companies to cover the difference. When global prices fall, the government will recover the extra payments and remit them to the national treasury.
Officials say the measure aims to reduce immediate financial strain on oil firms and create a steadier business environment for airlines. Analysts and industry stakeholders will watch whether the scheme helps stabilise airline operating costs and, ultimately, moderates fare volatility for passengers.
Original Source: https://assam.nenow.in/aviation-turbine-fuel-price-hike-raises-atf-costs-by-nearly-10-with-fixed-pricing-set-at-%E2%82%B9115-per-litre-for-three-years/
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Publish Date: 2026-06-10 11:57:00
