The union cabinet has approved a one-time budgetary support of up to Rs 100 billion for oil marketing
companies (OMCs) for the provision of an aviation turbine fuel (ATF) price stabilisation support towards
scheduled Indian airlines for domestic and international operations.
The interest-free advances are expected to act as a compensation for OMC losses as a result of elevated
international ATF prices, when import parity prices are higher than the benchmark price. The fixed-price
arrangement also enhances the predictability in fuel costs and reduces the impacts of fuel price spikes.
Moreover, as a one-time agreement, airlines are to procure ATF only from OMCs for up to three years, which
would be reviewed annually or until the advance amount is fully recovered, whichever is earlier.
The move is expected to enhance ATF price stability and predictability, ensure continued international and
domestic air connectivity and safeguard passengers from sudden fuel price shocks.
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