India is expected to cushion the impact of the West Asia crisis on its airline industry by allocating around ₹5,000 crore under a proposed new version of the Emergency Credit Line Guarantee Scheme (ECLGS), sources told businessline.
Accordingly, the airline portion of the proposed scheme is expected to run for five years, with up to ₹1,000 crore that can be allotted per airline.
“The allotment can be extended by a further ₹500 crore if the promoter also puts in ₹500 crore,” a source told businessline.
“The proposed new scheme is expected to cushion the industry from the pressures arising from the West Asia crisis,” the source added.
Extended Support
Notably, the allocation for airlines is part of a broader proposal for a ₹2.5 lakh crore credit guarantee scheme being considered amid the impact of the ongoing West Asia war.
As per sources, the Union Cabinet is expected to soon take a call on the scheme to support various sectors affected by the crisis.
Besides, the scheme is likely to provide up to 90 per cent credit guarantee coverage through the National Credit Guarantee Trustee Company (NCGTC), a second source told businessline.
“The scheme is expected to extend support across sectors, especially to the airline industry,” the second source said, highlighting disruptions in routes, costs, and operations.
Furthermore, sources said the earlier ECLGS had been effective in supporting businesses during stress periods such as Covid.
Hike Protection
Recently, the Centre has taken various steps to shield airlines and protect passenger interests from the impact of crude oil price volatility arising from the West Asia crisis.
The Centre, via the Ministry of Civil Aviation (MoCA), has implemented measures to cushion airlines against a sharp rise in operating costs driven by higher Aviation Turbine Fuel (ATF) prices, airspace restrictions, and currency pressures.
To arrest any substantial increase in expenses, the government has capped domestic ATF price increases at 25 per cent, resulting in a lower effective rise.
In another move, the government has removed airfare caps and kept the 60 per cent free seat allocation rule in abeyance to provide airlines with greater pricing flexibility.
Additionally, India’s aviation regulator has temporarily relaxed pilot Flight Duty Time Limitations (FDTL) for long-haul flights in response to global aviation disruptions.
Passengers’ Gain
In addition, India’s airport economic regulator has ordered a 25 per cent reduction in landing and parking charges for domestic flights across major airports.
Meanwhile, the reduction in airport charges is currently limited to domestic operations.
The decision will be reassessed before the end of the three-month period, based on prevailing conditions.
According to sources, in the absence of such interventions, airlines may have been compelled to undertake steeper fare increases, reduce capacity, and rationalise routes to maintain financial viability.
The government expects these steps to eventually stabilise and reduce airfares, thereby benefiting passengers, sources said.
Published on April 13, 2026