India Launches ATF Price Stabilisation Scheme; Jet Fuel Prices Rise 10%

India's state-owned oil marketing companies have implemented a roughly 10% increase in aviation turbine fuel (ATF) prices for domestic airlines, raising the rate from approximately Rs 104.93 per litre to Rs 115 per litre under a new government-backed price stabilisation framework. The voluntary scheme, approved by the Union Cabinet with a Rs 10,000-crore backstop, allows participating airlines to lock in a fixed ATF price for up to three years based on a free-on-board benchmark of Rs 86.32 per litre, translating to effective prices of Rs 115 per litre in Delhi, Rs 114.5 per litre in Mumbai, and Rs 139 per litre in Chennai. Airlines that opt out will pay prevailing market-linked rates, currently around Rs 142 per litre — the rate paid by international carriers — leaving them exposed to both further increases and potential declines. The scheme was prompted by a prolonged period during which domestic ATF prices were held near Rs 105 per litre despite international jet fuel costs surging from around Rs 60.50 per litre before the West Asia conflict to nearly Rs 142 per litre in May, causing losses for state oil companies. Under the stabilisation mechanism, the government will provide interest-free advances to oil companies when global benchmark prices exceed the base rate, with recoveries made when prices fall below it, with officials emphasising it is a stabilisation tool rather than a subsidy. ATF accounts for roughly 40% of airline operating expenses under normal conditions and can rise to 60% during periods of elevated prices, making fuel cost certainty a significant factor in airline profitability and ticket pricing.