Jet fuel prices nearly double, regional airlines seek revival of scrapped funds

Rising aviation turbine fuel (ATF) prices are forcing Indian airlines to reassess their operations, with regional carriers urging the Civil Aviation Ministry to revive the withdrawn price stabilisation fund with more favourable conditions.Industry insiders told India Today that high fuel costs have made additional flights financially unviable, even as some operators expand their fleet capacity."While the fleet capacity of certain airline operators is going up, their operations are going down due to the higher cost of fuel," a senior regional airline official said.Star Air, one of India's largest regional airline operators, has reduced its operations from 68 flights in the summer schedule to 52 in the winter schedule, citing high jet fuel costs. An industry insider said operating more flights had increasingly become equivalent to burning more cash, prompting both regional and larger carriers to recalibrate operations.Geopolitical tensions in the Middle East added to the pressure, with rising ATF prices and airspace restrictions disrupting operations. Air India and IndiGo were already grappling with the impact of Pakistani airspace restrictions. At the Aviation India event in Delhi, Air India CEO Tewolde Gebremariam had also highlighted how international competitors were not facing similar airspace-related challenges.AIRLINES SEEK REVIVAL OF ATF PRICE SUPPORT SCHEME In June 2026, the Union Cabinet approved one-time budgetary support of up to Rs 10,000 crore for oil marketing companies (OMCs) to provide ATF price stabilisation support to Indian airlines operating domestic and international flights. The scheme was intended to cushion carriers against sharp global price fluctuations but was discontinued a month later after failing to attract takers.ATF prices in India rose from around Rs 105 per litre in March to nearly Rs 207 in April. When the scheme was introduced, prices were around Rs 115 per litre. They stood at around Rs 137 per litre in October, keeping the industry under pressure.Airline executives said the conditions attached to the earlier proposal had discouraged participation, but a revised scheme could find takers."There were certain conditions in the earlier PSF proposal which made airlines uncomfortable, including the OMC from which we could acquire fuel. Moreover, it required us to enter into an MoU immediately and end our old commitments. We had never imagined ATF prices would reach the levels they are at right now," a senior airline executive told India Today."If the government comes up with tweaked clauses in the PSF proposal, possibly there will be takers this time around," the executive added.REGIONAL PLAYERS SEEK FAVOURABLE TERMSRegional airlines want the government to consider their contribution to connectivity while revisiting the scheme. A representative of a regional carrier said four to five such operators together account for only around 3 per cent of the country's ATF consumption but serve 30-35 per cent of unique routes."The government could mull over providing favourable or special treatment for regional players under the PSF. At least we hope so," the representative said, pointing out that these airlines keep routes operational where other players are unwilling to operate.Another senior regional airline executive said the industry would welcome the scheme's return even without special concessions."We would want the government to bring back the ATF PSF. While we don't want anything special, we would be happy if the government brings back the ATF PSF considering the surge in jet fuel prices," the executive told India Today.- Ends