India’s aviation sector, reeling under a sharp surge in jet fuel prices amid escalating tensions in West Asia, has received a crucial financial lifeline from the Centre. In a decisive move, the Union government has approved a ₹5,000 crore emergency credit support package to prevent major service disruptions and stabilise struggling airlines.
The decision was cleared during a Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday. According to an official statement, the financial assistance will be extended under the Emergency Credit Line Guarantee Scheme (ECLGS 5.0), specifically designed to help airlines cope with rising operational costs driven by soaring Aviation Turbine Fuel (ATF) prices.
Officials said that airlines will be eligible for loans of up to ₹1,000 crore each under the scheme. Additionally, companies willing to match the borrowed amount with equivalent capital investment can access an extra ₹500 crore in support. The loans will have a tenure of up to seven years, with a repayment window structured over the initial two years.
The Centre attributed the current crisis to unprecedented increases in ATF prices, triggered by global supply disruptions and restricted airspace on several international routes. These factors have significantly driven up operational expenses, forcing airlines to cut routes and reconsider service viability.
Civil Aviation Minister Ram Mohan Naidu welcomed the move, stating that the scheme aims to provide immediate liquidity support to airlines navigating a period of severe financial stress. He emphasised that ECLGS 5.0 is tailored to ensure continuity of operations and prevent a larger crisis in the aviation ecosystem.
The Financially Impacted Airlines (FIA), representing major carriers such as Air India, IndiGo, and SpiceJet, had earlier flagged the alarming rise in fuel costs in a communication to the government. The body warned that several routes had already turned financially unviable due to escalating expenses, and continued fuel price hikes could eventually force airlines to suspend services.
The surge in ATF prices is closely linked to rising global crude oil rates, exacerbated by geopolitical tensions in the Middle East. Industry sources indicate that jet fuel prices have crossed ₹2 lakh per kilolitre, placing enormous pressure on airline balance sheets.
With the government stepping in, the focus now shifts to how effectively airlines can leverage the financial support to maintain operations and absorb the ongoing cost pressures in an uncertain global environment.
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