Airlines equity capital bar hiked
30 Mar 2007
Mumbai: The civil aviation ministry has raised the minimum equity capital requirement for a five-fleet carrier that wants to fly Airbuses and Boeings (or aircraft above 40,000 kg weight) from Rs30 crore to Rs50 crore. There is also an equity requirement of Rs20 crore for addition of every five aircraft 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 aircraft). For addition of every five aircraft, these airlines will have to infuse equity capital of Rs10 crore. Existing carriers have been given a year to abide by the new rules.
Carriers could earlier expand their fleet without any limit once they put in Rs30 crore (Rs10 crore for smaller aircaft) as equity capital.
At the same time, the ministry has put an overall limit of Rs100 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.