Centre Announces Rs 10,000 Crore ATF Price Stabilisation Fund To Mitigate Impact Of West Asia Crisis On Aviation Sector
The centre also announced multi-thousand crore projects about four-laning of highways in Bihar and Telangana.
Published : June 3, 2026 at 3:48 PM IST
|Updated : June 3, 2026 at 4:04 PM IST
New Delhi: Day after the Centre slashed international jet fuel prices by 27 percent, the government has created Rs 10,000 crore fuel stabilisation fund to mitigate the impact of the ongoing West Asia crisis on aviation sector.
During a cabinet briefing here on Wednesday, Union Railway Minister Ashwini Vaishnaw, also announced multi-thousand crore projects including Rs 5041 crore scheme to phase out old trucks and buses in New Delhi, Rs 8301 crore coastal highway Rameshwar-Konark-Paradeep project and Rs 7597 crore 4-laning of sections NH63 and NH-563 in Telangana.
The move to create the ATF price stabilisation fund comes at a time when Indian carriers are facing additional operational challenges due to the closure of Pakistani airspace. The restrictions have forced airlines to take longer routes to Europe, North America and Central Asia, increasing fuel consumption and operating costs. As a result, long-haul airfares have risen, international demand has weakened and some carriers have reduced or suspended services on certain routes.
According to the government, the measure will generate positive spillover effects across tourism, hospitality, logistics, trade and exports, while helping sustain employment across airlines, airports, ground handling agencies, MROs and travel services. By preserving domestic and international connectivity, the initiative is expected to strengthen India's integration with global markets and support long-term economic growth.
The ATF price stabilisation support will remain in force for 36 months, with provision for annual review or until the advance amount is fully recovered and settled, whichever is earlier. The proposal may be extended beyond this period with the approval of the competent authority if the corpus is not fully trued up within the stipulated timeframe.
Significance of ATF Price Stabilisation Fund
According to the government, the ATF Price Stabilisation Fund will:
- Help stabilise ATF prices for scheduled Indian carriers.
- Prevent disruption of airline operations.
- Shield air passengers from fare spikes driven by global price surge.
- Protect 77 lakh jobs dependent on the aviation ecosystem.
- Safeguard substantial public investment in airport infrastructure by keeping airline operations viable.
- Maintain regional and international connectivity to Europe, North America and Central Asia given Pakistan airspace closure.
Sanjay Lazar, aviation expert and CEO of Avialaz Consultants, told ETV Bharat that the government's move to create a price stabilisation fund for scheduled Indian airlines towards ATF pricing is a very welcome step.
“It will bring some stability against the rampaging ATF prices that we witnessed, especially in the International sectors,” he said.
Lazar said that the ATF fund will protect the OMCs against the vagaries of rising costs of ATF and is in the form of a repayable one-time advance to the OMCs, which will be passed on to Airlines who want to participate in the scheme.
“The stabilisation price for ATF of Rs. 75.60 is a huge step and will be welcomed by all, domestic and international operators, as we had seen that open market prices were applicable for international flights and those had risen as high as Rs. 145 per litre.”
According to Ajay Jasra, an aviation expert, the fuel-price shock absorber for aviation sounds like a sensible precaution given West Asia's volatility. "It could help prevent sudden airfare spikes and protect economic activity. The idea is welcome; the fine print matters, how will the ₹10,000-crore fund operate, who benefits, what are the trigger conditions, and how will accountability be ensured?” he asked.
Sahil Mahajan, Partner, Aviation Airports and Hospitality PwC India said the Cabinet’s move to stabilise ATF prices is a timely intervention for an industry where fuel accounts for nearly half of operating costs.
"By cushioning airlines from extreme volatility, it protects margins and enables more predictable pricing for consumers. It also gives the sector critical breathing room to rebuild resilience amid ongoing geopolitical uncertainty. That said, this is not a permanent fix, but at times like this, a well‑timed intervention is exactly what the industry needs to stay on course. Structural reforms in fuel taxation and pricing will remain essential for long-term sustainability," he said.
Scheme for phasing out old trucks and buses in Delhi
Delhi-NCR's air quality gets impacted by old diesel trucks and buses (BS-IV and below). BS-I to BS-IV vehicles emit 67% more CO and 97% more particulate matter compared to BS-VI vehicles. The cabinet has approved the scheme for replacement of old trucks and buses registered in Delhi-NCR to BS-VI/EV vehicles.
With an outlay of Rs 5,041 Crore, the scheme will be implemented by the Ministry of Road Transport and Highways (MoRTH), National Capital Region Planning Board (NCRPB), Governments of Delhi, Haryana, UP and Rajasthan. Target: More than 1.9 lakh trucks and 16 thousand buses.
Coastal highway: Rameshwar-Konark-Paradeep
The Cabinet has also approved Greenfield coastal highway along Rameshwar-Konark-Paradeep section. The coastal highway is part of the highway from Rameshwar (Odisha) to Digha (West Bengal) with a total length of 160 km (approx. 160.18 km). The scheme has an outlay of Rs 8,301 Cr with a concession period of 17.5 years.
The coastal highway features:
- 4-lane access-controlled highway from Rameshwar to Konark on HAM (79.4 km, Rs 5,305 Cr)
- 2-lane paved shoulder highway from Konark to Paradeep on HAM (80.8 km, Rs 2,996 Cr)
4-laning of Khagaria-Purnea section
The existing 2-lane Khagaria-Purnea NH corridor connects Seemanchal region (Katihar–Purnea belt), Bhagalpur and Khagaria with Patna. It facilitates interstate movement between Bihar, West Bengal and Jharkhand. The cabinet approved 4-laning of Khagaria-Purnea section of NH-31 and NH-231 in Bihar. Cost: Rs 3,936 Cr Project length: 144 km Development through BOT (Toll) mode.
4-laning of key sections of NH-63 & NH-563
The cabinet has also approved 4-laning of Armoor-Jagtial-Mancherial section of NH-63 and Jagtial-Karimnagar section of NH-563 in Telangana.
Armoor-Jagtial & Jagtial-Mancherial projects: Part of Armoor-Mancherial Inter-Corridor under Bharatmala Pariyojana. Passing through Nizamabad, Jagtial and Mancherial districts. Providing connectivity between NH-44, NH-363 and NH-163G.
Jagtial-Karimnagar section: Part of the Jagtial-Karimnagar-Warangal Inter-Corridor under Bharatmala Pariyojana. Prime link between two important District HQs - Jagtial & Karimnagar. Connecting further to Warangal-Vijayawada on Nagpur-Khammam-Vijayawada corridor. (With inputs by Surabhi Gupta)
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