Equity base for start-up airline up

Mumbai: The hurdles to start an airline just got a notch higher. In a bid to prevent players without a robust financial backing from entering the airline industry, the Indian government has raised the entry barrier for starting airline. Now the minimum equity base needed will be Rs 20 crore and not Rs 10 crore as it was till now.
The Directorate General of Civil Aviation (DGCA) in an amendment to Civil Aviation Requirement, Section 3, which pertains to Air Transport, has raised the minimum equity base needed to start an airline with immediate effect.
Till recently, the minimum financial base needed to start an airline with a fleet of heavy aircraft like Boeing 737s, A320s etc (take off weight more than 40,000 kgs) was Rs 30 crore. It has now been raised to Rs 50 crore. For airlines that plan to have a fleet of turbo-props and comparatively lighter aircraft the minimum equity base has gone up from Rs 10 crore to Rs 20 crore.
For every aircraft added into the fleet thereafter, the airline concerned will have to show an additional financial base of Rs 20 crore/Rs 10 crore respectively. For the players with a financial backing of Rs 100 crore, entry would be cakewalk.
The move has put the dozen-odd airlines waiting to start operations in a quandary.
02/07/07 Manju V/Times of India

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Categories: General Aviation Jul 2007, New Jul 2007