Government mulls revival of jet‑fuel price fund as costs spike

Government may revive the Rs 10,000‑crore jet fuel Price Stabilisation Fund (PSF) as jet fuel prices surge again. The scheme, announced in June, lapsed when airlines did not join after prices fell. Jet fuel rose to about Rs 137 per litre on Oct 1, a jump of Rs 16 per litre. The hike has pushed fuel to account for 55‑60% of airline operating costs, up from 30‑40% earlier, according to the Federation of International Airlines (FIA). IndiGo has already lifted its fuel surcharge on tickets after six months without a rise. Civil Aviation Minister K Rammohan Naidu said talks are under way with airlines and public‑sector oil marketing companies (OMCs) on pricing, but gave no details. The FIA, representing IndiGo, Air India and SpiceJet, urged a shift to cost‑plus pricing instead of the current international benchmark model. It warned that without timely relief, airlines could drop unprofitable routes. Under the original PSF, OMCs would sell jet fuel to participating carriers at a fixed Rs 115 per litre in Delhi, regardless of world market swings, and be reimbursed from the fund for any losses. The arrangement would last up to three years and require airlines to buy exclusively from OMCs. No airline signed up before the scheme lapsed because global prices briefly fell. ## Context The PSF is a government‑backed buffer that uses a large fund to keep domestic jet fuel prices steady, protecting airlines from volatile international markets. This helps avoid sudden ticket‑price hikes and route cutbacks.