Rishi Sunak has told the aviation industry to find other forms of funding and not turn first to the government for help getting through the coronavirus crisis.
Demand for tickets has collapsed forcing companies to ground aircraft.
Airline bosses have been urging the government for a targeted relief package to stop companies going under as a result of the slump in demand.
But in a letter on Tuesday the UK chancellor said the government would only step in as “a last resort”.
Mr Sunak instead urged airlines to try and raise money from shareholders.
He said the state would only enter into negotiations with individual airlines once they had “exhausted other options”.
IATA said that without government support, up to half of airlines face possible bankruptcy in the coming weeks.
“We have a liquidity crisis coming at full speed – no revenues and costs still on our (books), so we desperately need some cash,” Alexandre de Juniac, director-general of the International Air Transport Association (IATA), said.