The Government has approved a temporary support measure aimed at mitigating the impact of soaring Aviation Turbine Fuel (ATF) prices on the aviation sector, ensuring uninterrupted air connectivity and protecting economic activity across the country.
The initiative comes in response to unprecedented volatility in global ATF prices triggered by the ongoing West Asia crisis. The measure is expected to shield airlines from severe fuel cost pressures, maintain operational stability, and prevent sharp increases in airfares for passengers.
Ensuring Stable Air Connectivity
The support mechanism will help sustain both domestic and international air services, ensuring continued connectivity across India. It is also expected to reduce the transmission of fuel price shocks to passengers, thereby moderating airfare volatility. By supporting airline operations, the measure will help maintain air links to remote regions and Tier-II and Tier-III cities, contributing to balanced regional development and inclusive economic growth.
Economic and Employment Benefits
Stable airline operations are expected to protect employment across multiple sectors, including airlines, airports, ground handling services, maintenance, repair and overhaul (MRO) facilities, travel agencies, hospitality, and logistics.
Continued air connectivity will facilitate the movement of passengers, business travellers, tourists, and high-value cargo, supporting economic activity nationwide. The initiative is also expected to generate positive spillover effects for tourism, trade, exports, regional development, and investment.
Additionally, the measure will help ensure optimal utilization of airport infrastructure developed across the country, including airports operationalized under the Government’s UDAN regional connectivity scheme. By preserving domestic and international air links, it will strengthen India’s integration with global markets and support long-term economic growth.
The aviation sector has been facing severe challenges due to sharp fluctuations in global fuel prices following the West Asia crisis. International ATF prices surged nearly 2.5 times, rising from ₹60.50 per litre in March 2026 to ₹142 per litre in May 2026.
ATF accounts for approximately 40 percent of an airline’s operating costs and can rise to as much as 60 percent during periods of extreme fuel price volatility. While ATF prices for domestic operations have been capped, Indian airlines continue to procure fuel for international operations at Import Parity Prices (IPP), exposing them to significantly higher costs.
The Government noted that the existing price cap on ATF is only a temporary arrangement and is not financially sustainable for Oil Marketing Companies (OMCs), which have been incurring losses amid rising fuel prices.
The situation has been further aggravated by the closure of Pakistan’s airspace to Indian carriers, forcing longer flight routes to Europe, North America, and Central Asia. These extended routes have increased fuel consumption and operational expenses.
As a result, long-haul international airfares have risen substantially, demand has weakened, and several airlines have reduced or suspended services on certain international routes. The newly approved measure is intended to provide immediate relief to the aviation industry while ensuring continued connectivity, economic stability, and support for India’s long-term growth objectives.
