Government moves to make airlines financially sound

Seeking to make airline operators financially stronger, the government has decided to increase the subscribed equity capital required to set up a scheduled airline with five large aircraft from USD 300 million to USD 500 million. The subscribed equity capital for those airlines owning five small aircraft like turboprop ATRs and Dorniers are also being doubled from USD 100 million to USD 200 million, official sources said. The new norms would be applicable to all airlines with retrospective effect, with the carriers having planes like Boeing 737s or Airbus A-320s or larger ones required to inject USD 200 million additionally into their subscribed equity base.

The norms are related to the weight of the aircraft, with the 737s and 320s weighing over 40,000 kg and ATRs weighing much less than that. However, the existing airlines would be given a year's time to pump in the money into their subscribed equity capital base. A gazette notification on the matter is likely to be issued soon, the sources said, adding that the decision would become effective from the day the notification is issued. Civil Aviation Minister Praful Patel has been maintaining that the financial bottom-line of the airlines should be strong and the entry of non-serious players should be avoided as the industry was highly capital intensive.

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