New airlines need Rs50 crore capital, 5 large aircraft to start operations

22 Apr 2009

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Applicants for scheduled airline permit must have a minimum paid-up capital of Rs50 crore and a fleet of five large aircraft, with a carrying capacity of over 40,000 kg each to begin operations.

The new rules, issued by the Director General of Civil Aviation (DGCA), will be applicable to all new entrants in the sector.

The new rules, including fixing minimum levels of equity and barring investments by foreign carriers, have become part of the civil aviation regulations for operation of scheduled airlines,.

Under the new rules, incorporated recently into the Civil Aviation Requirements (CARs), the airlines company will have to put in additional Rs20 crore equity for each additional aircraft beyond the minimum five required to start operations.

Airlines that plan to fly smaller planes should have a minimum fleet of five and a minimum equity of Rs20 crore. They should add Rs10 crore to its equity for each addition of small aircraft.

Airlines operating both large and small aircraft need not add to their base capital in case they have reached a capital base of Rs100 crore.

Domestic airlines can accept up to 49 per cent foreign equity and 100 per cent NRI investment through the automatic route. However, participation by foreign carriers, either directly or indirectly, in domestic air transport service is barred.

Airlines may import aircraft on dry or wet lease from foreign airlines and outsource maintenance, subject to government and DGCA guidelines.

These airlines can have marketing arrangements like ground handling, general sales, code sharing and interlining contract with foreign airlines, but are barred from any management contracts.

DGCA had, last month, issued revised flight safety instructions after investigation of accidents in the past. The regulator had identified several common causes of accidents and the deficiencies which led to the accidents.

To enhance the safety airline operators should have a `Flight Safety Awareness and Accident/ Incident Prevention Programme,' for reviewing and identification of the hazards and system deficiencies. The programme should also educate all personnel engaged in civil aviation industry about the measures, which help in promoting safety in aviation.

All operators engaged in scheduled air transport services, including cargo services and  non-scheduled air transport services, should prepare a `Flight Safety Manual' and get this manual approved by the director of air safety at the DGCA headquarters.

All operators should establish an effective `Flight Safety System' for use and guidance of operational personnel. DGCA will provide guidance material for preparation of Flight Safety Documentation System.

Imparting safety awareness amongst the personnel of an organisation is an important step for enhancing safety in aviation, it said, adding, . ''Sustained education of these personnel will go a long way in achieving this objective.''

Accordingly, all flight crew, maintenance engineers, cabin crew and other key personnel shall be given periodical refresher courses to update their knowledge.

The operator shall organise periodic safety seminars for the benefit of their personnel. Specialists in the field of safety may be invited to give presentations so that lessons could be learnt from the experience of others.

Pilots, engineers and safety managers of the operators should participate in the safety seminars organised by the DGCA and other agencies in the country and abroad.

Appropriate safety posters should be developed and displayed at different work places.

Safety bulletins highlighting case studies and safety lessons from serious occurrences in aviation industry in India and abroad should be prepared and circulated to the concerned personnel.

The operators should also bring out their own periodical safety journal.

While the operators evolve their own detailed accident/incident prevention programme keeping in view the nature and scope of their operations, DGCA said they should also undertake other steps like building safety culture in the organisation, periodically carrying out internal safety audit of different divisions like operations, maintenance, commercial, security, ground support, etc.

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