The proposed Aviation Turbine Fuel (ATF) Stabilisation Fund will be optional for airlines, with carriers free to decide whether they want to participate in the scheme, Rohit Raj, Director at the Ministry of Civil Aviation, said during a briefing.
Raj said the government is working on the modalities of the fund and expects the scheme to become operational soon.Â
“Airlines may or may not opt for the scheme,” he said, adding that the ministry is currently “waiting for airlines to show their interest” before taking the next steps. The official noted that work on the framework is underway as the government seeks to finalise the operational details of the proposed mechanism.
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“The measure is structured as a temporary buffer. Whether airlines would want to participate in this fixed-price arrangement for a period of three years and the quantum of the ATF requirement they are willing to hedge through this mechanism will remain monitorable,” said Kinjal Shah, Senior Vice President and Co-Group Head, Corporate Sector Ratings, ICRA Limited.
ATF accounts for nearly 40% of airline operating costs and during periods of extreme fuel volatility, can constitute up to 60% of total operating expenditure.
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“The measure is structured as a temporary buffer. Whether airlines would want to participate in this fixed-price arrangement for a period of three years and the quantum of the ATF requirement they are willing to hedge through this mechanism will remain monitorable,” said Kinjal Shah, Senior Vice President and Co-Group Head, Corporate Sector Ratings, ICRA Limited.
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