DGCA raises financial requirements for airline start-ups

Mumbai: The Directorate General of Civil Aviation (DGCA) has raised the minimum equity base needed to start an airline with immediate effect, by making an amendment to the Civil Aviation Requirement, Section 3, which pertains to air transport. The minimum equity base now required will be Rs20 crore, up from the current requirement of Rs10 crore.

The move is aimed at preventing players without a robust financial backing from entering the airline industry. The move would come as a stark reminder for the dozen odd airlines, waiting to start operations, of the tough times that now lie ahead for entrants into the aviation business, so far India's sunshine sector.

For airlines that now plan to operate a fleet of turbo-props and comparatively lighter aircraft, the minimum equity base has gone up from Rs10 crore to Rs20 crore.

The minimum financial base required to start an airline with a fleet of heavy aircraft, such as Boeing 737s, A320s etc (take-off weight more than 40,000 kgs) was Rs30 crore, which has now been raised to Rs50 crore.

For every aircraft added into the fleet thereafter, airlines will now have to show an additional financial base of Rs20 crore/Rs10 crore respectively.