Centre eyes Rs 5,000 crore relief, China’s Hotan route to ease airline stress amid Iran war: Report

The Centre is weighing a range of relief measures for airlines as the prolonged US-Iran conflict continues to push up operating costs and dampen passenger demand, with a Rs 5,000 crore Emergency Credit Line Guarantee Scheme (ECLGS) under consideration to provide a financial lifeline to struggling carriers, reported TOI.

"This will be subject to a limit of Rs 1,500 crore per airline," ministry officials told TOI. While IndiGo, the only financially stable big airline, in terms of being able to generate revenues it needs, will be eligible for this scheme, they add "it might not need the same."

The aviation ministry is working to secure clearance for the Hotan route through China, which could ease operations for Air India on west-bound flights by bypassing Pakistan and cutting fuel-intensive detours, potentially saving the airline millions, reported TOI. At the same time, efforts are underway to secure relief on jet fuel excise duties, as base prices are expected to remain elevated.


Air India has submitted a detailed plan to reroute its wide-body Airbus A350 and Boeing 787-9 flights to bypass Pakistan’s airspace. The proposal involves services from Delhi and Mumbai heading towards Leh, entering Chinese airspace, and then turning near Hotan towards Kyrgyzstan before joining existing routes to Europe, the UK and the US — with a similar path on the return leg.

The airline has told the government that this alignment would reduce dependence on Pakistan’s airspace decisions, which have remained uncertain. The prolonged closure has forced airlines to take longer routes, increasing fuel burn. Combined with elevated fuel prices and a weaker rupee, this has significantly raised operating costs, with Air India among the worst affected.

A recent EY report highlighted that nearly 20 per cent of global jet fuel supply is linked to the Middle East, making the region critical for aviation economics. As a result, volatility in fuel prices has once again emerged as the most significant cost factor for airlines. In addition to cost pressures, airspace restrictions in the region are forcing airlines to reroute flights, increasing travel distances by up to 10-15 per cent on major international corridors. This has led to higher fuel consumption, increased crew expenses, and greater operational complexity for carriers.