Price Stabilization Fund for Scheduled Indian Airlines

About Price Stabilization Fund for Scheduled Indian Airlines

• It is a one-time budgetary support of ten thousand crore rupees for Oil Marketing Companies to provide ATF price stabilisation support to Indian Airlines for their domestic and international operations.
• Objective: The budgetary support shall be in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas. 
  • The support will be provided to companies to facilitate stable ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis.
• Key component of  Price Stabilisation Fund:
  • Interest-Free advance to OMCs: It provides for a one-time budgetary support of up to Rs.10,000 crore, which shall be provided as an interest-free advance to OMCs to support ATF price stabilisation for Scheduled Indian Airlines. 
    • The corpus shall compensate OMCs for losses arising from elevated international ATF prices whenever the prevailing Import Parity Price exceeds the benchmark price determined under the approved mechanism.
  • Recovery and True-Up Mechanism: When international ATF prices moderate, the differential amount shall be recovered from OMCs and returned to the Consolidated Fund of India. 
    • The arrangement shall continue until the entire support amount is fully recovered and settled.
  • Coverage of Domestic and International Operations: The scheme shall be available to all willing Scheduled Indian carriers for both domestic and international operations.
  • Fixed ATF Price Arrangement: The mechanism provides greater predictability in fuel costs by adopting a fixed-price arrangement for domestic and international operations, thereby reducing the airline’s exposure to sudden fuel price spikes
  • Exclusive rights of ATF supply to OMCs: The arrangement will be implemented through an MoU between participating Indian airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum & Natural Gas as signatories. 
    • Under this arrangement, participating airlines will procure ATF only from OMCs for up to three years, subject to annual review or until the advance amount is fully recovered, whichever is earlier.
  • Implementation, Monitoring and Audit: A Monitoring Committee comprising representatives of the Ministry of Civil Aviation, the Ministry of Petroleum & Natural Gas and the Department of Expenditure shall oversee implementation, claim verification, reconciliation and settlement. All claims and recoveries shall be subject to audit.
  • Duration of Price Stabilisation support: ATF price stabilisation support will be in force for a period of thirty-six months, with provision for annual review or until the advance amount is fully recovered/settled, whichever is earlier. 
    • The proposal may be extended beyond thirty-six months with the approval of the Competent Authority in case the corpus is not fully trued up within this period.
• Key Benefits: It will supports employment across the aviation ecosystem while maintaining passenger and cargo connectivity to sustain economic activity.
  • It will also strengthens tourism, trade, regional development, and global market integration through efficient utilisation of airport infrastructure.