The Hindu Business Line : Govt tightens financial norms for domestic airline operators

New Delhi March 29 In an attempt to ensure that players with deep pockets enter the domestic airline sector, the Government has made the financial norms for scheduled airline operators more stringent.

It has now been stipulated that an airline promoter must pump in a minimum paid-up capital of Rs 50 crore if the five aircraft being operated are over 40,000 kg, and Rs 20 crore otherwise.

In addition, the promoters would be required to infuse additional equity investment of Rs 20 crore for every five aircraft inducted.

Earlier, the norms stipulated that an airline must have paid-up equity capital of Rs 30 crore and a minimum of five aircraft to get scheduled operator status.

The promoters did not have to pump in any more funds into paid-up capital even when the fleet grew.

In fact, the earlier rules also allowed further relaxation to scheduled airline operators as they could get an initial no objection certificate with only 10 per cent of the paid-up capital.

The Government is of the view that there may be no need for insisting on further enhancement of equity of the paid-up equity/reserves if Rs 100 crore is available with the airline.

The only relaxation being offered is that now scheduled airline operators may be allowed to commence operations with one aircraft instead of three.

However, there is no change in the earlier rule of augmenting the fleet size to five aircraft within one year of issuance of scheduled operator permit.