Indian airlines seek faster release of ECLGS 5.0 funds

Airlines have sought the Civil Aviation Ministry's urgent intervention to get banks to release the balance credit sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, starting with the first tranche.The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, has written to Civil Aviation Minister Ram Mohan Naidu seeking expeditious disbursement of credit support to eligible member airlines.

In its letter, FIA said the Indian aviation industry is facing

unprecedented financial and operational challenges . It attributed these to the continuing conflict in West Asia since April 2026, airspace restrictions and flight diversions, rupee depreciation, rising operational costs and a sharp increase in aviation turbine fuel (ATF) prices. These developments have severely strained airline liquidity and working capital, necessitating immediate Government support,

FIA said.Part of sanctioned credit receivedThe industry body said it appreciates the government's initiative to extend credit support under ECLGS 5.0, while noting that not all its members require credit under the scheme.It said airlines that sought credit under the scheme have received only a portion of the sanctioned assistance. The release of the balance amounts has been delayed in several cases due to

on the part of lending institutions, it said. Therefore, it is imperative that MoCA facilitates the timely release of funds under the ECLGS 5.0 scheme, particularly for member airlines that remain financially vulnerable and have applied for the immediate liquidity support provided by ECLGS 5.0 to sustain and strengthen their operations,

FIA requested the Ministry of Civil Aviation (MoCA) to provide appropriate guidance and reassurance to participating banks to facilitate the release of the balance sanctioned amounts, beginning with the first tranche under the scheme.

FIA said. It said timely disbursement would help airlines meet critical operational and working-capital requirements, sustain operations and continue providing air connectivity across the country.

The federation said airlines play a critical role in national connectivity, trade, tourism, employment and economic growth. It added that the sector's financial and operational sustainability is important for the wider economy and the government's vision of Viksit Bharat 2047. Timely support at this juncture is critical to help safeguard the financial viability of member airlines that have sought support under the ECLGS 5.0 scheme, at the same time protecting the aviation ecosystem and ensuring the continued delivery of vital air services in the larger national interest,

The Union Cabinet approved ECLGS 5.0 in May this year to ease liquidity stress on airlines, MSMEs and other businesses hit by the West Asia conflict. The scheme has a total outlay of Rs 18,100 crore and aims to unlock additional credit of up to Rs 2.55 lakh crore, of which Rs 5,000 crore is earmarked for the aviation sector.

FIA said. For airlines, the government provides a 90 per cent credit guarantee through the National Credit Guarantee Trustee Company Limited (NCGTC), with no guarantee fee. Eligible scheduled passenger airlines can raise additional credit of up to 100 per cent of their peak credit outstanding during January to March 2026, capped at Rs 1,500 crore per borrower across the banking system.

Loans carry a tenor of seven years, including a two-year moratorium on repayment, and the guarantee cover runs for the full tenor. Only airlines with outstanding credit facilities as on March 31, 2026, and standard accounts are eligible. Loans must be sanctioned by March 31, 2027.

The scheme revives the model of the original ECLGS, which was launched during the Covid-19 pandemic to provide government-guaranteed, collateral-free credit to MSMEs. Since the West Asia conflict began, Indian carriers have faced higher fuel costs, closed airspace and longer flying routes, forcing cuts in several international operations.(With inputs from ANI)