For the first time since the opening up of the sector, airlines may be asked to apply to the Government for any new capacity induction on various routes. The Civil Aviation Ministry is working on a proposal in this regard.
“With demand growing at lesser pace than the capacity induction, airlines are forced to sell tickets at less than the cost. This is resulting in severe pressure on their finances and consequently on passenger safety. It would be appropriate to bring some restrictions,” a person familiar with the development told Business Line .
The Government may prescribe number of seats to be added for a block period of two or three years. Then airlines will be required to apply for new capacity. The application will be considered and disposed on ‘first come-first serve' basis subject to various conditions. Accordingly, permission for aircraft import or acquisition will be granted.
While previous demand and supply on particular route will be kept in mind, the financial health of the airline will be one of the prime considerations. “The whole process has to be impartial and we will see that no airline suffers,” he said.
Current procedure
At present, airlines are free to add capacity on various routes according to their commercial requirements. They just need to apply to the Aircraft Acquisition Committee under the Civil Aviation Ministry for aircraft purchase or import.
The committee takes cognizance of the conditions prescribed for operating an airline and decides on the application. It does not take a view on which routes the aircraft will fly or whether there are excess capacities or not.
Decision on the new system can be expected even before the summer schedule, he added. Summer schedule for the airlines starts from last Sunday of March. The latest move is a result of financial surveillance of airlines from safety perspective.
Final report
The aviation regulator, Directorate General of Civil Aviation (DGCA) has got presentations from all the airlines on their financial health. A senior official in the Civil Aviation Ministry said that although the final report is being readied but one thing is clear that the industry as a whole is facing serious financial problem which could affect safety of passengers.
The Civil Aviation Requirements (CAR) makes it mandatory for all the schedule airlines (flying with minimum of five aircraft and fix schedule) and non-schedule airlines with more than five aircraft to file assessment information by December 31 of every year.
This surveillance is done to identify airlines in distress either due to financial issues or operational issues so as to ensure that safety oversight functions are not affected and also to pin-point changes in the operating environment conditions, which significantly alter the balance between resources and operations.
The evaluation process include collection of information through formal or informal channels, monitoring of indicators of change (leading or lagging), and so on, which could have possible impact on safety of aircraft operations.