Cabinet approves Rs 10,000 crore ATF price stabilisation fund to shield airlines, jet fuel prices

📌 Summary:

• Union Cabinet on June 3, 2026 approved a ONE-TIME budgetary support of Rs 10,000 crore towards an Aviation Turbine Fuel (ATF) Price Stabilisation Fund
• Purpose: cushion India's airlines amid escalating jet fuel prices triggered by the West Asia conflict (U.S.-Israeli war on Iran)
• Mechanism: budgetary support → routed to Oil-Marketing Companies (OMCs) as interest-free advances → OMCs supply ATF to scheduled airlines at stabilised prices
• Coverage: scheduled Indian airlines, both DOMESTIC and INTERNATIONAL operations
• Context: ATF is a major input cost for airlines (typically 30-40% of operating costs); spike in crude prices following the conflict had threatened airline viability
• Significance: Protects passenger air fares, supports the aviation sector during external shock, prevents airline insolvencies

🎯 UPSC Relevance: GS3 — Indian Economy; Infrastructure (Aviation), energy economics, government intervention in markets, fiscal measures.

📝 Prelims Facts:

• Fund size: Rs 10,000 crore (one-time budgetary support)
• Channel: routed through Oil-Marketing Companies (OMCs) as interest-free advances
• Beneficiaries: scheduled Indian airlines (domestic + international operations)
• ATF = Aviation Turbine Fuel (jet kerosene)
• ATF prices are revised on the 1st of every month by Public Sector OMCs (IOCL, BPCL, HPCL)
• ATF currently attracts central excise duty + state VAT (varies significantly by state)

🔑 Key Term: Price Stabilisation Fund — a government-backed buffer mechanism used to insulate consumers or strategic sectors from sharp price spikes by subsidising the price gap during volatility, financed via budgetary support.