On Tuesday, Civil Aviation Minister K Rammohan Naidu told reporters at a national aviation conference that the Ministry is exploring a reintroduction of the ATF price stabilisation fund. The idea follows the Centre’s earlier decision in June to earmark up to ₹10,000 crore for oil marketing companies, a scheme that never saw use from airlines. The revival proposal comes amid a West‑Asia conflict that has pushed international jet‑fuel benchmarks up, causing domestic prices to climb in a three‑month streak.
OTC fuel prices have surged to ₹137 per litre at the Delhi terminal, up from ₹121.28 in September, after a ₹6.28 litre increase in September and a ₹5 litre rise in August. For airlines, jet fuel represents roughly 40 per cent of operating costs, and the new price hikes have already been reflected in IndiGo’s announced fuel‑charge increase, which will take effect from October 6. The airline said the month‑on‑month jump exceeded 14 per cent, a figure it says is among the highest in a decade.
The Federation of Indian Airlines, representing Air India, IndiGo and SpiceJet, has drafted a letter to the ministry demanding a review of the current pricing formula, arguing that domestic ATF is too tightly tied to international benchmarks and that a cost‑plus model would better protect airlines from volatile external shocks. The letter also cites rupee depreciation and higher refinery margins as additional pressures on cash flow. Airlines have already cut capacity on some routes, citing the West‑Asia crisis as a contributing factor.
If the Cabinet clears the revival, the fund would provide an immediate cushion to oil marketing companies and airlines, potentially curbing the need for fare hikes. The Ministry is expected to present the proposal at the next cabinet meeting scheduled for next Wednesday, with a decision anticipated by the end of the week.