Under the framework, carriers were required to execute a tripartite MoU with the Ministry of Civil Aviation, the Petroleum Ministry and the concerned OMC before purchasing ATF under the fixed-price mechanism.
The Centre has discontinued its ₹10,000-crore aviation turbine fuel (ATF) Price Stabilisation Fund (PSF) scheme after no domestic airline came forward to sign the mandatory memorandum of understanding (MoU) with state-owned oil marketing companies (OMCs) within the prescribed timeframe, sources told businessline. According to sources, the voluntary mechanism failed to take off despite the Centre operationalising the framework following the recent West Asia crisis. “The scheme has been discontinued as no airline signed the required MoU with the OMCs within the prescribed timeline,” a person aware of the development said.In June, the Cabinet had approved the one-time ₹ 10,000-crore Price Stabilisation Fund to protect airlines from sharp volatility in global ATF prices triggered by geopolitical tensions in West Asia. The scheme was designed to compensate OMCs for losses arising from supplying jet fuel to participating airlines at a pre-determined benchmark price. Sector reliefIt formed part of a broader package of measures announced by the Centre to shield the aviation sector from the impact of the crisis.Under the framework, participation by airlines was voluntary. Carriers choosing to opt in were required to execute a tripartite MoU with the Ministry of Civil Aviation, the Ministry of Petroleum and Natural Gas and the concerned OMC before purchasing ATF under the fixed-price mechanism.The benchmark ATF prices under the scheme were fixed at the free-on-board (FOB) level at ₹86.32 per litre for domestic operations and ₹104.49 per litre for international operations, with the effective selling price in Delhi working out to around ₹115 per litre after applicable charges.However, sources said the subsequent moderation in international crude oil and ATF prices significantly reduced the commercial attractiveness of the fixed-price mechanism. As market-linked ATF prices eased following the de-escalation of tensions in West Asia, airlines preferred to continue procuring fuel under the prevailing pricing mechanism rather than commit to the stabilisation framework.The PSF mechanism had replaced the temporary cap on domestic ATF prices that the government introduced after international jet fuel prices surged sharply during the height of the West Asia crisis. Relief measuresBesides the fuel-price measures, the Centre had also capped increases in airport landing and parking charges, extended the Emergency Credit Line Guarantee Scheme (ECLGS) to airlines and persuaded several States to reduce value added tax (VAT) on ATF to cushion the industry’s operating costs.As per sources, while the present scheme has been discontinued, the government remains prepared to consider similar market-stabilisation measures should global fuel prices witness another prolonged period of exceptional volatility.“The framework was created to address an extraordinary situation. If similar circumstances arise again, the government has the experience and policy framework to respond quickly,” another source said.Published on July 26, 2026
