Govt tightens norms for airline operations

RELATED NEWS Kingfisher Airlines takes delivery of ATR aircraft Jet Airways introduces check-in while walk-in at Mumbai Kingfisher Airlines duped of Rs 17 crore Passenger comfort, the new mantra for airlines Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

New Delhi Jan. 19

The Government has revised the norms for airline operations in the country by increasing the subscribed equity capital required for setting up a scheduled airline with five large aircraft from the existing Rs 30 crore to Rs 50 crore.

While this new norm would be applicable with retrospective effect for those having aircraft weighing 40,000 kilograms each, existing airlines would, however, get a year to comply. Moreover, the Government has stipulated that such airlines will have to pump in an additional Rs 20 crore into the subscribed equity capital for every five additional aircraft they induct.

In effect this would mean that the state-owned Indian that has a fleet of 74 aircraft and a subscribed equity of Rs 107 crore would have to pump in more than Rs 200 crore to meet the new norms.

The move is unlikely to affect two airlines - Kingfisher that has a subscribed equity base of Rs 372 crore and a fleet of 23 aircraft and the low cost airline Spice Jet that has a current subscribed equity base of Rs 185 crore and a fleet of 10 Boeing 737s. Most other airlines would, however, have to pay up.

Official sources told Business Line that the new rules, which were approved on Friday, would come into effect from the day that the order is published in the official gazette.

contd on page 2...