'Much-needed support’: Air India on Centre’s ₹10,000-crore aviation fuel price relief package

AIr bharat on wed welcomed the Centre's ₹10,000-crore monetary fund to facilitate stay fresh aviation fuel prices stable. The airline said the decision would provide much-needed support to the aviation sector and help airlines maintain connectivity during a period of high fuel price volatility.This came after the Union cabinet, chaired by Prime Minister Narendra Modi, approved a one-time support package to help keep ATF (aviation turbine fuel) prices stable for scheduled Indian airlines. This follows a sharp increase in global aviation fuel prices linked to the ongoing war in West Asia.ALSO READ | Delhi airport's third runway may remain shut till September amid efforts to enhance aircraft-handling capacityAir India backs government moveOn X, the airline said it "warmly welcomes and deeply appreciates" the government's decision.“This progressive measure provides a much-needed support to the Indian aviation ecosystem and reinforces the Government’s commitment to strengthening connectivity for the people of India, while enabling airlines to serve passengers more effectively,” the statement read. What the government saidEarlier, civil aviation minister Ram Mohan Naidu said tensions in West Asia (due to the US war on Iran) led to a sharp rise in aviation fuel prices globally. To ensure the increase does not translate into a sudden burden on passengers, the Cabinet approved the ₹10,000-crore fund to support Indian airlines.According to the minister, the measure will help keep airfares more predictable, maintain connectivity across the country and ensure airlines continue operating smoothly amid global uncertainty.ALSO READ | Air India to reduce domestic flights by around 22% amid high fuel pricesHow the scheme will workUnder the scheme, the government will provide up to ₹10,000 crore in interest-free support to oil companies to help keep ATF prices stable when global fuel prices rise. When fuel prices fall, the amount provided will be recovered from the oil companies and returned to the government.Coverage for domestic and international flightsThe scheme will be open to all Indian airlines operating domestic and international flights. The government said it will help airlines manage fuel costs by offering more stable ATF prices and protecting them from sudden price spikes.Airlines joining the scheme will buy ATF only from oil companies for up to three years, subject to annual review.Fuel costs increase over 2x in 2 monthsInternational ATF prices increased from around ₹60.50 per litre in March to about ₹142 per litre in May, according to the government.ATF accounts for nearly 40% of airline operating costs and can rise to as much as 60% during periods of extreme fuel price volatility.The closure of Pakistani airspace for Indian carriers has also increased operating costs by forcing longer flight routes to Europe, North America and Central Asia, resulting in higher fuel consumption.Expected benefitsThe government said the measure will help reduce fare volatility, support airline operations and sustain domestic and international connectivity.Officials said the scheme would also support employment across airlines, airports, maintenance providers, travel agencies, hospitality businesses and logistics firms.The government expects the initiative to benefit tourism, trade, regional connectivity and the utilisation of airport infrastructure, including facilities developed under the UDAN scheme.