The Indian government has given a green light to a Rs 5,000 crore emergency credit scheme for airlines, aimed at providing much-needed liquidity to the aviation sector amidst a sharp surge in jet fuel prices. This decision comes as a relief for carriers struggling with rising operational costs.
Key Highlights of the Scheme
The emergency credit line will be extended through public sector banks, with the government providing a partial guarantee. Airlines can avail of this credit to meet their working capital requirements, including fuel purchases and other operational expenses.
Impact on Airlines
Industry experts believe that this move will help airlines manage their cash flow better and avoid any potential disruption in services. The scheme is expected to benefit both full-service carriers and low-cost airlines.
Jet fuel prices have increased by over 50% in the past year, putting immense pressure on the profitability of airlines. The government's intervention is seen as a timely step to prevent any financial distress in the sector.
Government's Statement
The Ministry of Civil Aviation stated that the scheme is part of the government's broader efforts to support the aviation industry, which has been severely impacted by the pandemic and now by the fuel price hike. The credit will be disbursed in a phased manner based on the needs of the airlines.
Reactions from the Industry
Airline associations have welcomed the decision, calling it a lifeline for the sector. They have urged the government to also consider reducing taxes on jet fuel to provide long-term relief.
The scheme is expected to be operational within a month, with detailed guidelines to be issued by the finance ministry soon.
