Extended Emergency Credit Line Guarantee Scheme To Cover Aviation

Parliamentary Domestic - aviatorsbuzz
A representational picture of aircraft at Bengaluru airport. Source: teamvtaviation/Instagram

The Government of India on Sunday expanded its Emergency Credit Line Guarantee Scheme (ECLGS) to include the aviation sector, which is among many of the businesses hit by the second wave of the COVID-19 pandemic.

The Emergency Credit Line Guarantee Scheme removes the ceiling of outstanding loans of Rs. 500 crore, but keeps the government’s guarantee cover of Rupees three trillion unchanged. Borrowers will be able to avail assistance limited to 40 % or Rs. 200 crore, whichever is lower.

A Press Information Bureau (PIB) note said that the civil aviation sector will be covered under the Emergency Credit Line Guarantee Scheme – ECLGS 3.0 announced on March 31, 2021, which had now been expanded to include aviation.

Extended Emergency Scheme

Under the rules of Ease of Doing Business for MSMEs, the Finance Ministry had on March 31, 2021, introduced Emergency Credit Line Guarantee Scheme 3.0 to cover enterprises in hospitality, travel & tourism, and leisure and sporting sectors with total credit outstanding, as of February 29, 2021, not exceeding Rs. 500 crore and overdues, if any, were for 60 days or less on the said date.

On Sunday, in what is being dubbed as Emergency Credit Line Guarantee Scheme 4.0, the government extended the scheme to include hospitals or nursing homes/clinics setting up on-site oxygen generation plants, restructured MSME accounts, civil aviation sector, among others, Business Standard reported.

The validity of the Emergency Credit Line Guarantee Scheme has been extended to September 30. Disbursements can be made until December 31.

Extended Scheme Welcomed

Reacting to the government move, Ajay Singh, Chairman and Managing Director, SpiceJet said, “The inclusion of the Civil Aviation Sector under the Emergency Credit Line Guarantee Scheme is a welcome and timely move by the government that should help the sector that has been the most severely impacted by the COVID-19 pandemic.”

Mr. Singh remarked that world over, we have seen governments come to the rescue of their airlines multiple times over the last one year.

“Airlines in Indian have been at the very forefront of this war against COVID and the government’s recognition of the difficulties being faced by our industry is certainly a move in the right direction,” he said.

After travel started dwindling following the second wave, the Indian airline industry had sought a relief package from the government, asking that it include a waiver of landing and parking charges and payment to oil marketing companies.

Airlines had sought a limited period concession of the standing rule of slot allocation, which mandates that firms must operate at least 80 per cent of their allocated slots.

Civil Aviation Minister Hardeep Singh Puri, had in in a written reply in Parliament said that local airlines had asked the government to include jet fuel in goods and services tax, and abolish excise duty on aviation turbine fuel.

$2.5 billion to Fly: CAPA

Indian carriers need as much as $2.5 billion to keep flying, according to estimates from Sydney-based CAPA Centre for Aviation last year, and one or more of the nation’s airlines are expected to fail in the absence of additional funding from the government or their owners.

India, CAPA said was one of the most difficult places for the aviation industry even before the pandemic, with fares as little as 2 cents and some of the world’s highest fuel taxes.

Close to 3 million jobs in aviation and related industries as well as more than $11 billion in revenue could be lost in India this year because of the pandemic according to the International Air Transport Association.

Domestic airlines were allowed to operate flights after two months of lockdown on May 25 at one-third capacity of their summer schedule. This limit was then revised to 45 per cent flight capacity on June 26, 2020, further expanded to 60 per cent and then 80 per cent.

However, the exponential rise in cases in recent weeks has impacted the demand, which dropped by nearly 13 per cent in the last week of March 2021 compared to the previous month.

The domestic traffic witnessed further jolt in April 2021 and demand fell by 5 per cent from the last week’s average of March 2021. An industry expert said the second wave has resulted in a lower number of bookings, reflecting the panic and fear among people.



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