Stories
Airlines Urge Government to Release Pending ECLGS Loans Amid Rising Costs
- •The Federation of Indian Airlines urged the Civil Aviation Ministry to help release pending funds sanctioned under the Emergency Credit Line Guarantee Scheme 5.0.
- •Airlines face mounting financial pressures due to the West Asia conflict, airspace restrictions, flight diversions, and a weaker rupee.
- •While partial funds have been received, the release of remaining amounts has stalled as some participating lenders hesitate to disburse the money.
- •The FIA clarifies it is only seeking the acceleration of already approved funding for working capital, not any additional financial assistance.
- •ECLGS 5.0 is a government-backed credit support scheme launched in May 2026, offering a 90% credit guarantee to lenders extending loans to eligible airlines.
Key Questions Answered
Approved in May 2026, ECLGS 5.0 is a government-backed credit support scheme providing a 90% credit guarantee to lenders on additional loans extended to eligible scheduled passenger airlines. The scheme allocates ₹5,000 crore for the aviation industry, allowing eligible carriers to access additional working capital credit of up to 100% of their peak eligible exposure, capped at ₹1,500 crore per borrower.
The Federation of Indian Airlines (FIA) stated that while airlines applied for assistance and received part of their sanctioned funds under ECLGS 5.0, the release of remaining amounts has been delayed due to lender hesitation. The FIA asked the ministry to guide and reassure participating banks to disburse these pending funds for day-to-day operations.
Airlines are dealing with the impact of the West Asia conflict, which has caused airspace restrictions, flight diversions, and increased fuel consumption. Additionally, carriers face elevated aviation turbine fuel (ATF) prices, a weaker rupee increasing foreign currency expenses, and mounting financial pressures on daily working capital.
