Airlines need urgent liquidity, but banks delay release of sanctioned funds; FIA writes to Centre

The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, has urged the Civil Aviation Ministry to intervene after the release of balance amounts sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 was delayed in several cases.

In a letter to Civil Aviation Minister Kinjarapu Ram Mohan Naidu, FIA said airlines that had sought credit under the scheme had received only a portion of the assistance sanctioned, while lending institutions had delayed releasing the remaining amounts.

FIA has asked the ministry to provide "appropriate guidance and reassurance" to participating banks so that the balance sanctioned amounts can be released, beginning with the first tranche.

Airlines face liquidity pressure

The airline industry is facing "unprecedented financial and operational challenges" due to the continuing conflict in West Asia since April 2026, airspace restrictions and flight diversions, rupee depreciation, rising operating costs and a sharp increase in aviation turbine fuel (ATF) prices, the federation said.

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

The federation said not all its members require credit under ECLGS 5.0. But it said airlines that have applied for the support need access to the funds without avoidable delays.

ECLGS 5.0 is a government-backed credit programme approved in 2026 to provide additional liquidity to businesses, including scheduled passenger airlines, affected by disruptions linked to the West Asia crisis.

Under the scheme, banks and other participating lenders provide the loans, while the National Credit Guarantee Trustee Company (NCGTC) provides government-backed guarantee cover.

FIA seeks release of sanctioned funds

The federation said continued hesitation by lending institutions had delayed the release of the remaining sanctioned amounts in several cases. It urged the Civil Aviation Ministry to facilitate the timely release of funds, particularly for airlines that remain financially vulnerable and have applied for immediate liquidity support.

"This would enable airlines desirous of availing the scheme and in urgent need of liquidity to meet critical operational and working-capital requirements, sustain their operations and continue providing essential air connectivity to the nation," the federation said.

FIA said timely support was needed to safeguard the financial viability of airlines seeking assistance, while also protecting the wider aviation ecosystem.

The federation said airlines are important to national connectivity, trade, tourism, employment and economic growth. It also highlighted the sector's wider employment impact, saying an estimated 6.10 additional people are employed in ancillary and allied businesses for every person employed in aviation.

"The financial and operational sustainability of Indian airlines is therefore vital not only to the aviation sector but also to the wider economy and the Government's vision of Viksit Bharat 2047," FIA said.