India approves $1 billion fund to help airlines weather fuel cost surge

India approved a 100 billion rupee ($1.05 billion) fuel stabilisation fund on Wednesday to help keep jet fuel prices in check for airlines hit by rising costs from the Iran war.

The government said the support would be provided as interest-free advances to oil marketing companies to cover under-recoveries - the gap between market-linked jet fuel prices and the moderated rates charged to airlines.

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"The measure will help protect and sustain domestic and international air connectivity, ensuring continuity of air services," it added.

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Shares of India's largest airline, IndiGo, reversed course to trade up 1 per cent.

Globally, airlines have been squeezed by rising jet fuel prices, which can account for up to 40 per cent of operating costs.