Airlines Get Fuel Price Shield: Fixed Rates for 3 Years

State-owned fuel retailers have introduced a price stabilization scheme following a recent 10 percent surge in aviation turbine fuel (ATF) prices. Domestic airlines can now opt for a fixed fuel rate for a period of up to three years. This measure is designed to shield carriers and passengers from the unpredictable swings in global oil prices. Airlines participating in the voluntary scheme will pay Rs 115 per litre for jet fuel, a rate insulated from international market fluctuations.

Under this new arrangement, participating airlines will adhere to a fixed free-on-board benchmark price of Rs 86.32 per litre, plus applicable airport charges, oil company margins, and taxes. This results in an effective selling price of Rs 115 per litre in Delhi. The scheme also includes a government-backed mechanism where interest-free advances will be provided to oil marketing companies to cover price differences when global benchmarks exceed a base rate, with recovery occurring when prices fall. This initiative aims to moderate sudden airfare increases and provide greater fare stability for travellers.