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Norms tightened for new airline operators

Special Correspondent

Equity requirement pushed up

NEW DELHI: As the civil aviation sector continues to be highly capital intensive and requires maintenance of high technical and safety standards, the Government on Thursday revised financial norms for scheduled airlines operators, saying that infusion of additional capital would be a pre-requisite for any addition to the fleet size.

For airlines operating aircraft with take off mass exceeding 40,000 kg, the equity requirement for five aircraft has been pushed up to Rs. 50 crore and for each addition of up to five aircraft, additional equity investment of Rs. 20 crore will be required.

For airlines operating aircraft with take off mass not exceeding 40,000 kg, the equity requirement for five aircraft will be Rs. 20 crore and for each addition of up to five aircraft, additional equity investment of Rs. 10 crore will be required.

All existing private operators will also be required to comply with the new requirements and wherever necessary will have to raise their authorised and paid up capital to the prescribed minimum levels within a maximum period of one year.

However, the financial strength of the airline for induction of new fleet can be ensured by the net worth of the airline.

The Government is of the view that there may be no need for insisting on further enhancement of equity if the paid up equity or reserves of Rs. 100 crore are available with the airline. It would mean that both state-owned Indian and Indian Airlines will not be affected by the new financial norms and their fleet acquisition programme will also continue as per schedule, official sources said.

A scheduled airline operator may be allowed to begin airline operations with one aircraft instead of three as presently prescribed under the rules. However, the requirement of augmenting the fleet size to five aircraft within one year of issuance of scheduled operator permit will continue.

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