Indian airlines had sought a bailout package worth 47.
50 billion rupees (one billion dollars) to survive in the face of shrinking traffic and high fuel costs.
However Civil Aviation Minister Praful Patel said no bailout was on offer but airlines would get more time to pay their fuel bills.
"No financial relief has been given to the private airlines," he told parliament.
But "the credit period for current purchases of fuel has been increased to 90 days from existing 60 days," he said.
Last week, Patel said the sector was going through its "worst-ever phase.
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Domestic airlines jointly owe 630 million dollars to state-held petroleum firms, according to the government.
Fuel amounts to around 40 percent of an airline's operational costs.
The sector posted a combined loss of 938 million dollars in the fiscal year to March 2008 and analysts expect losses to touch two billion dollars this year.
Left-wing members of parliament have strongly opposed state handout