Civil Aviation Minister Ram Mohan Naidu says the move will help stabilize airfares, protect connectivity and support tourism, hospitality and trade amid global fuel volatility.

Key Highlights

• Union Cabinet approves up to ₹10,000 crore ATF price stabilization support.
• Measure aims to cushion airlines from fuel price volatility linked to the West Asia crisis.
• Airlines to receive predictable fuel pricing through participating OMCs.
• Scheme covers both domestic and international operations.
• ATF accounts for nearly 40% of airline operating costs under normal conditions.
• Government says the move will help reduce airfare volatility.
• Support mechanism will remain operational for up to 36 months.
• Tourism, hospitality, cargo and regional connectivity expected to benefit.

Government Steps In to Stabilize Aviation Fuel Costs as Airlines Face Global Price Pressures

New Delhi, June 3: In a significant relief measure for India’s aviation industry, the Union Cabinet has approved a one-time fuel price stabilization support package of up to ₹10,000 crore aimed at protecting airlines from unprecedented volatility in Aviation Turbine Fuel (ATF) prices.

The decision comes amid continuing geopolitical tensions in West Asia, which have triggered sharp increases in global fuel prices and intensified operating cost pressures on airlines worldwide.

Under the approved framework, Oil Marketing Companies (OMCs) will receive interest-free budgetary support to facilitate ATF price stabilization for scheduled Indian airlines operating both domestic and international services. The mechanism is expected to improve cost predictability for carriers while helping maintain continuity of air services across the country.

Welcoming the decision, Civil Aviation Minister Kinjarapu Rammohan Naidu said the intervention reflects the government’s proactive approach toward safeguarding the aviation ecosystem while minimizing the impact of fuel price shocks on passengers.

According to the minister, the government has already implemented several measures to support airlines during the current crisis. These include moderating domestic ATF price increases, reducing landing and parking charges for domestic carriers and encouraging states to lower VAT on aviation fuel.

The latest package is expected to provide additional financial stability to airlines by reducing uncertainty around one of their largest operating expenses.

ATF remains the single biggest cost component for airlines, accounting for approximately 40 per cent of operating costs under normal circumstances. During periods of extreme market volatility, fuel expenditure can rise to nearly 60 per cent of total operating costs, significantly affecting profitability, route planning and fare structures.

The government believes the stabilization mechanism will help airlines maintain services while reducing the extent to which rising fuel costs are passed on to passengers through higher fares.

The scheme will remain operational for 36 months, subject to annual review, and will be monitored by a committee comprising representatives from the Ministries of Civil Aviation, Petroleum & Natural Gas and the Department of Expenditure.

Industry stakeholders have largely welcomed the decision, viewing it as an important step toward preserving operational stability at a time when airlines are facing elevated fuel costs and increased route-related expenses due to regional geopolitical disruptions.

Why It Matters for Hospitality, Travel & Tourism

The aviation sector remains one of the most important drivers of tourism growth in India, making this decision particularly relevant for hospitality businesses.

Airfare volatility often has a direct impact on leisure travel demand, business travel budgets and destination competitiveness. By reducing uncertainty around fuel costs, the government aims to create a more stable operating environment for airlines and a more predictable pricing environment for travellers.

For hotels, resorts, convention centres and tourism operators, sustained airline capacity is critical to maintaining visitor flows, especially to destinations that depend heavily on air connectivity.

The measure could be particularly beneficial for Tier-II and Tier-III destinations, where regional air services have become increasingly important in driving tourism growth and economic activity.

The government’s emphasis on maintaining domestic and international connectivity is also expected to support inbound tourism, MICE travel (Meetings, Incentives, Conferences and Exhibitions), luxury tourism and high-value business travel segments.

Additionally, stable airline operations help sustain demand across airport hospitality, travel services, cargo logistics, food supply chains and aviation-linked employment sectors.

As India continues to expand its aviation network and tourism infrastructure, industry experts view fuel price stability as a key factor in supporting long-term growth across the travel and hospitality ecosystem.

Hospitality & Tourism Impact

Positive Outcomes Expected

• Greater airfare stability for domestic and international travellers.
• Improved confidence among airlines in maintaining route networks.
• Continued connectivity to emerging tourism destinations.
• Support for hotel occupancy and tourism demand.
• Better conditions for business travel and MICE tourism.
• Reduced pressure on travel operators and tour packages.
• Stronger cargo connectivity supporting food, seafood and export sectors.

Industry Watch Points

• Duration of global fuel price volatility.
• Recovery of international travel demand.
• Impact on long-haul international routes.
• Future adjustments to aviation fuel taxation and pricing.

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Source: PIB | Ministry of Civil Aviation | June 3, 2026