Government Launches ₹10,000 Crore Fund For the Aviation Sector

The Centre has announced a ₹10,000 crore fund for India's aviation sector. This is to enhance the availability of finance in view of the rise in aviation turbine fuel (ATF) prices.

The Ministry of Civil Aviation had publicly stated that the move aims at setting up a separate financing arrangement for projects and enterprises related to air transport. The government believes the fund will help strengthen the sector’s financial ecosystem and support future expansion.

Why Has This Been Announced?

The new fund comes at a time when airlines are facing pressure from increasing ATF prices, which is one of the biggest components of airline operating costs. This makes profitability highly sensitive to fluctuations in crude oil and aviation fuel prices.

According to industry estimates, state-run oil marketing companies (OMCs) could face losses of as much as ₹1.2 lakh crore in the first quarter of FY27.

Airlines have already been struggling with weaker demand and rising operating expenses. Domestic air passenger traffic fell 4.2% month-on-month to just over 1.38 crore passengers in April, compared with March, as carriers reduced flights amid softer travel demand and higher fuel costs.

Also Read - India To Scrap Capital Gains Tax On Foreign Investment In Government Securities

The latest ₹10,000 crore aviation fund builds on earlier government support measures, including the Emergency Credit Line Guarantee Scheme (ECLGS), under which nearly ₹5,000 crore was earmarked for airlines to help the sector navigate financial stress.

According to the government, the fund will be managed through a professional investment structure and will focus on providing financial support across different segments of the aviation value chain.

Sources:

NDTV Profit

GOI Press Release