Norms tightened for new air carriers

By Bureau Report | 30 Mar 2007

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In a bid to regulate the entry of more air carriers, the civil aviation ministry has raised the minimum equity capital requirement for carriers to start or continue operations. The concession available to scheduled airline operators to have only 10 per cent of the paid-up capital at the time of receiving the initial NOC has also been withdrawn.

The minimum equity capital requirement for a five-fleet carrier to fly Airbuses and Boeings (or aircraft above 40,000kg weight) has been raised from Rs30 crore to Rs50 crore. Moreover, carriers will have to comply with an equity requirement of Rs20 crore for every five aircraft added to the fleet.

For carriers operating smaller aircraft like the Dornier (less than 40,000 kg), the government has doubled the minimum equity capital requirement from Rs10 crore to Rs20 crore for a fleet of five, with an additional equity infusion of Rs10 crore for every five aircraft being added to the fleet. Existing carriers have to comply with the new rules within one year.

Uptil now carriers could expand their fleet without any limit after meeting the requirement of Rs30 crore equity capital for those operating the large aircraft or Rs 10 crore for smaller aircaft.
At the same time, the ministry has put an overall limit of Rs 100 crore as total equity capital. Beyond this, the expansion of fleet by carriers will not be linked to a commensurate increase in its equity capital.

The new stipulation would impact the new carriers who have applied for licences and have equity capital below Rs50 crore.

At the same time, the number of aircraft required to commence scheduled airline operations has been eased to one aircraft from three. But, the requirement for augmenting the fleet size to five aircraft within one year of issuing the scheduled operator permit will continue.

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