Domestic Carriers may need equity refuelling to stay in air

New Delhi: Domestic carriers will be required to continuously top up their paid-up equity capital or face grounding. The government is planning to review the financial strength of airlines at regular intervals.
The review will be done by an independent regulator, who will prescribe and revise minimum equity capital requirements at frequent intervals.
“It will not be enough for an aviation player to meet a one-time entry norm and continue to expand its operations without having the corresponding financial strength (minimum paid-up capital and reserves)..,” an official involved in reshaping the aviation policy said.
Today, an aspiring company is required to have Rs 12-50 crore paid-up equity capital (depending on type of operation) to launch scheduled flights.
The proposal comes at a time when more players are planning to launch regional airlines. With increasing liberalisation of entry conditions, the number of regional and national airlines is expected to jump significantly. It is also feared the aviation infrastructure will not be able to sustain such growth.
21/01/08 Nirbhay Kumar & Rajeev Jayaswal/Economic Times

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Categories: Indian Aviation- In General Jan 2008