Centre Approves ₹5,000 Crore Relief Package for Airlines Amid Rising Fuel Costs

The Centre has approved a ₹5,000 crore emergency credit support scheme for the aviation sector as Indian airlines grapple with rising fuel prices and operational disruptions caused by the ongoing crisis in West Asia.

The financial assistance, introduced under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, is aimed at helping airlines manage mounting operational costs and maintain services during a period of global uncertainty. The decision comes as carriers face increasing pressure due to soaring aviation turbine fuel (ATF) prices, volatile crude oil markets and currency fluctuations.

Officials said the crisis in West Asia has significantly impacted airline operations, particularly on international routes. Several carriers have been forced to reroute flights to avoid conflict zones and restricted airspace, resulting in longer flying times and higher fuel consumption. Industry experts warned that continued instability in the region could further increase operational expenses for airlines in the coming months.

Under the scheme, eligible airlines will be able to avail loans of up to ₹1,000 crore. Additional support of up to ₹500 crore may be provided if airlines infuse matching equity into their businesses. The loans will reportedly have a tenure of up to seven years, including a two-year moratorium on repayments to provide temporary financial relief.

The government has also allowed up to 50 per cent of the interest burden to be converted into a Funded Interest Term Loan (FITL), a move designed to ease repayment pressure and improve liquidity for airlines facing cash-flow difficulties.

The loans will be backed by government guarantees through the National Credit Guarantee Trustee Company Limited, reducing the lending risk for banks and financial institutions. Officials said the package is intended to support operational continuity, protect jobs and prevent disruptions in domestic and international air connectivity.

Civil Aviation Minister Ram Mohan Naidu said the scheme reflects the government’s effort to safeguard the aviation industry during a challenging global environment. The aviation support package forms part of the broader ECLGS 5.0 programme approved by the Union Cabinet to assist sectors affected by geopolitical instability and rising economic pressure. Analysts believe the move could provide temporary relief to airlines struggling with higher fuel bills and weakened profitability.