Centre to Extend ₹4,000 Crore Emergency Credit Programme to Airlines Hit by West Asia Disruptions

The Centre is considering an emergency credit facility of about ₹4,000 crore for airlines affected by disruptions linked to tensions in West Asia, as per The Economic Times reports. The proposal includes a sovereign guarantee on loans of up to ₹1,000 crore for each airline. 

Carriers may also access an additional ₹500 crore if promoters invest an equal amount. The guarantee is to support borrowing, while loan approvals will remain subject to lender assessment. 

Disruptions Hit Key Routes 

Airlines have faced operational constraints following a reduction in flights to West Asia. The region accounts for over 30% of India’s international air traffic, making it a major source of revenue. 

Even after a temporary ceasefire, restrictions remain. Airports in Dubai are currently allowing foreign carriers to operate only a limited number of daily flights, affecting schedules and capacity. 

Cost Pressures Increase 

Alongside route disruptions, airlines are dealing with higher costs, particularly due to a rise in aviation turbine fuel prices. This has added to financial pressure at a time when revenues are already affected by lower international operations. 

The combined impact has strained cash flows across the sector, especially for carriers with existing financial challenges. 

Broader Relief Framework 

The airline proposal forms part of a plan to provide credit guarantees on loans worth about $26.7 billion. The scheme is for businesses affected by the ongoing geopolitical situation. 

Banks are expected to continue their usual due diligence processes before extending loans, despite the sovereign guarantee. 

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Conclusion 

The proposed credit line may provide temporary relief to airlines, though disbursement will depend on lender appetite and the financial position of individual carriers. 

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