Airlines seek govt intervention to speed up ECLGS 5.0 fund disbursal

Indian airlines have sought the intervention of the Civil Aviation Ministry to persuade banks to expedite the release of credit sanctioned to them under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, as escalating costs and operational disruptions linked to the West Asia conflict continue to put pressure on their finances.

The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, has written to Civil Aviation Minister Ram Mohan Naidu seeking the ministry’s help in ensuring that banks release the remaining amounts already sanctioned under the scheme.

In its letter, the FIA said the aviation industry is facing unprecedented financial and operational challenges due to the continuing conflict in West Asia. Airspace restrictions and flight diversions, coupled with a sharp increase in aviation turbine fuel (ATF) prices, have significantly raised operating costs for airlines.

“These developments have severely strained airline liquidity and working capital, necessitating immediate Government support,” the FIA said.

According to the industry body, airlines that have applied for assistance under ECLGS 5.0 have received only part of the credit sanctioned to them. In several cases, disbursement of the remaining amount has been delayed amid continued hesitation by lending institutions.

The FIA urged the Ministry of Civil Aviation (MoCA) to provide guidance and reassurance to participating banks so that the balance sanctioned amounts can be released without further delay.

“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,” it said.

The airlines said timely access to the sanctioned funds would help them meet critical operational and working-capital requirements, maintain flight operations and continue providing air connectivity across the country.

The request comes as airlines face a combination of higher fuel expenses, longer flight routes caused by airspace restrictions and additional operational costs arising from the ongoing disruption in West Asia. For carriers already operating with tight margins, delayed access to working capital can further constrain their ability to manage day-to-day expenses.

The government approved ECLGS 5.0 in May this year to provide financial support to airlines, MSMEs and other businesses affected by the West Asia conflict, with the broader objective of protecting jobs and maintaining business continuity.

The scheme has a total outlay of Rs 18,100 crore and is designed to unlock additional credit of up to Rs 2.55 lakh crore. Of this, Rs 5,000 crore has been earmarked for the aviation sector.

Under the scheme, the government provides a 90 per cent credit guarantee through the National Credit Guarantee Trustee Company Limited (NCGTC), without charging a guarantee fee. Eligible scheduled passenger airlines can raise additional credit of up to 100 per cent of their peak credit outstanding during January-March 2026, subject to a maximum of Rs 1,500 crore per borrower across the banking system.

The FIA said swift disbursement of the sanctioned assistance is particularly important for airlines that remain financially vulnerable, arguing that access to the approved liquidity could help them withstand the current disruption and maintain the stability of domestic air connectivity.