Union Petroleum Minister Hardeep Singh Puri on Wednesday, 3 June 2026, announced that the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a one-time budgetary support of up to Rs 10,000 crore for Oil Marketing Companies (OMCs) to stabilise Aviation Turbine Fuel (ATF) prices for Scheduled Indian Airlines. The Minister said the measure will cushion both domestic and international operations of Indian carriers and shield passengers from fare spikes linked to the ongoing global energy disruption.

Calling it a 'landmark relief to the country’s aviation and energy sectors', Puri said the fund will 'prevent disruption of airline operations while protecting air passengers from fare spikes driven by the geopolitical conflict involving several energy producers'. He added that the support will safeguard 77 lakh jobs dependent on the aviation ecosystem and protect public investment in airport infrastructure.

Context

The decision comes against the backdrop of sustained volatility in global crude and refined-product markets, with international ATF prices remaining elevated through much of the past year. Puri noted that Indian OMCs have made 'only very minor price adjustments' for consumers, and that ATF prices for domestic airlines have not been raised despite firm international benchmarks.

The Minister contrasted India's position with that of several economies in South Asia and the West, arguing that New Delhi has maintained 'steady and uninterrupted supply of affordable and sustainable energy' even as global supply chains have been strained.

Policy backdrop

Aviation Turbine Fuel typically accounts for around 40 per cent of an Indian airline's operating cost, making carriers acutely sensitive to crude price swings and rupee depreciation. The Centre has previously used a mix of excise duty cuts and state-level VAT reductions to soften ATF costs, particularly during the post-COVID recovery between 2021 and 2023.

The new mechanism marks a shift from tax-side relief to direct budgetary support routed through OMCs — primarily Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum — which sell ATF at airport fuelling stations. A similar approach was adopted in 2022, when the Centre absorbed under-recoveries at OMCs after the Russia-Ukraine conflict pushed crude above USD 100 a barrel.

Stakeholders and impact

Scheduled Indian carriers operating domestic and international routes stand to be the most direct beneficiaries, with ATF cost relief expected to improve unit economics on price-sensitive routes. Puri framed the move as protecting 'regional and international connectivity', a reference to tier-2 and tier-3 routes that are particularly vulnerable to fuel-driven fare hikes.

For passengers, the support is intended to prevent the kind of sharp ticket-price escalation seen during previous oil shocks. The Minister specifically flagged the cushion for air travellers as a key objective, alongside the protection of jobs across pilots, cabin crew, ground handling, MRO services and airport operations.

OMCs, which would otherwise have had to absorb the gap between subsidised ATF rates and international parity prices, will see their balance sheets insulated through the budgetary transfer. The exact disbursement formula and the period over which the Rs 10,000 crore will be released were not detailed in the Minister's post.

What's next

Attention will now turn to the operational guidelines for the support fund, including how the Rs 10,000 crore is split across OMCs and the trigger thresholds linked to international ATF benchmarks. Monthly ATF price revisions by state-owned refiners will be closely watched for evidence that the cushion is being passed through to airline operators.

The measure is also likely to come up for scrutiny in the next session of Parliament, where questions on aviation sector viability, fuel taxation and the long-term fiscal cost of repeated energy-sector interventions are expected. For now, the Cabinet's decision reinforces a pattern of targeted fiscal action to insulate strategic sectors — energy, aviation and connectivity — from external price shocks.