The government's proposed Aviation Turbine Fuel (ATF) Stabilisation Fund will be voluntary for airlines, allowing carriers to choose whether they want to participate in the scheme. The Ministry of Civil Aviation is currently finalising the operational framework and expects the mechanism to become functional in the near future.
The fund is designed to help airlines manage fluctuations in jet fuel prices, one of the largest cost components in the aviation industry.
Speaking during a briefing, Rohit Raj, Director at the Ministry of Civil Aviation, said airlines will have complete flexibility in deciding whether to join the proposed fund.
According to the ministry, discussions are ongoing with industry stakeholders, and the government is awaiting feedback from airlines before moving ahead with implementation. The final structure of the scheme will be based on operational requirements and participation interest from carriers.
The proposed fund is expected to offer airlines a mechanism to hedge part of their fuel requirements against sharp price swings.
Aviation Turbine Fuel remains one of the biggest expenses for airlines, accounting for nearly 40% of operating costs under normal conditions. During periods of elevated crude oil prices and market disruptions, fuel costs can rise to as much as 60% of total operating expenditure.
The proposed stabilisation fund seeks to provide a temporary buffer by allowing participating airlines to access fuel at predetermined prices for a fixed period. This could help carriers improve cost predictability and protect margins during periods of extreme volatility.
The Ministry of Civil Aviation is currently working on the finer details of the scheme, including participation guidelines and operational modalities.
A fixed-price arrangement over a multi-year period has the potential to provide financial stability to airlines, although carriers will need to carefully assess the benefits against future market price movements.
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The proposed ATF Stabilisation Fund represents a significant policy initiative aimed at helping airlines navigate fuel price volatility. While participation will remain optional, the scheme could offer a valuable risk-management tool for carriers seeking greater cost certainty in an industry where fuel expenses play a critical role in profitability.
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Published on: Jun 4, 2026, 5:13 PM IST
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