India opens $1 billion support fund to protect its airlines from higher jet fuel costs

The scheme will be open to all scheduled carriers in the country.

India’s government has stepped in to shield the country’s airlines from rising jet fuel prices amid the Iran conflict by launching a Rs100 billion ($1 billion) price stabilisation fund.

The fund will provide interest-free advances to oil marketing companies “to facilitate stable ATF [aviation turbine fuel] pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis”, says the Indian government in a 3 June statement.

The one-time measure, which is open to all scheduled Indian carriers, “provides greater predictability in fuel costs by adopting a fixed-price arrangement for domestic and international operations, thereby reducing airlines’ exposure to sudden fuel price spikes”, states the government.

It adds that the temporary support fund, which will be in place for a period of three years, will help stabilise airfares and protect domestic and international air connectivity.

The move will be welcomed by Indian carriers, which have taken a hit from soaring fuel prices and been forced to cut capacity. Air India last month said it would reduce its international operations through to August in response to high fuel prices and airspace restrictions.

Meanwhile, low-cost carrier IndiGo slashed its capacity growth expectations for the first quarter of fiscal year 2027, compared with the same period last year, and outlined plans to phase out less fuel-efficient leased aircraft, after reporting a full-year net loss of Rs23.9 billion.

IndiGo introduced a revised fuel surcharge in April, which it says has enabled it to recover a large portion of the increased costs in its domestic market. However, it has been unable to completely offset rising costs in its international market.