Union Cabinet approved one-time budgetary support not exceeding ₹10,000 crore for Oil Marketing Companies (OMCs)
Support is in the form of interest-free advances to OMCs through Demands for Grants of Ministry of Petroleum and Natural Gas
Scheme provides ATF price stabilisation support to Scheduled Indian Airlines for domestic and international operations
Corpus compensates OMCs when prevailing Import Parity Price exceeds benchmark price
Mechanism includes recovery and true-up - differential amount recovered from OMCs when international ATF prices moderate
Scheme available to all willing Scheduled Indian carriers
Fixed-price arrangement adopted for domestic and international operations
Participating airlines must procure ATF only from OMCs for up to three years, subject to annual review
Implementation through MoU between participating airlines and OMCs, with Ministry of Civil Aviation and Ministry of Petroleum & Natural Gas as signatories
Monitoring Committee comprises representatives of Ministry of Civil Aviation, Ministry of Petroleum & Natural Gas and Department of Expenditure
All claims and recoveries subject to audit
Support period: thirty-six months with provision for annual review or until advance amount fully recovered
Extension beyond 36 months possible with Competent Authority approval if corpus not fully trued up
International ATF prices surged nearly 2.5 times from ₹60.50/litre in March 2026 to ₹142/litre in May 2026
ATF accounts for nearly 40% of airline operating costs, can reach up to 60% during extreme volatility
Closure of Pakistan airspace for Indian carriers resulted in longer flight paths to Europe, North America and Central Asia
Scheme aims to reduce pass-through of fuel price shocks to passengers and moderate fare volatility
