No plan to cap airline licences: Ajit Singh

It is the civil aviation ministry's mandate to see the aviation sector is financially healthy. We do not want any fly-by-night operators: Ajit Singh

The government has no plans to cap airline permits, Civil Aviation Minister Ajit Singh said on Tuesday. Singh, however, has asked the Directorate General of Civil Aviation to carry out a study of capacity and demand growth and review some of the licencing norms, including the minimum paid up-capital requirement for starting an airline. This is being done to ensure strong financial health of the aviation sector, he said.

“We are not going to stop anyone from starting an airline. There is no plan to cap licences,” Singh said. Airline companies require a no-objection certificate (NOC) and a scheduled operating permit from DGCA to launch services. At present, nine airlines operating on regional and national routes. AirAsia and Tata-Singapore Airlines are awaiting approval.

“We have asked DGCA to study capacity and demand growth. There is nothing unsual in this. It is done in other parts of world too. It is civil aviation ministry’s mandate to see that aviation sector is financially healthy. The paid-up capital required to start an airline in India is low. We do not want any fly-by-night operators,” Singh said. He said civil aviation ministry was under fire when Kingfisher collapsed and the government was asked why it did nothing to prevent that.

India’s air traffic grew to 61 million in 2013, up nearly four per cent from the previous year.

The minister said plans for review of licencing norms was under consideration for the past six months. “It may take a year before it is finalised,” he said and denied the government was trying to push the changes at the fag end of UPA-II’s tenure.

An airline company requires a  paid-up capital of Rs 50 crore and a fleet of five planes, besides meeting safety, operational and security requirements, to receive approval from DGCA.

Kapil Kaul, South Asia chief executive of aviation consultancy Centre for Asia Pacific Aviation (CAPA), said: “We  welcome tightening of policy for granting new airline licenses to allow only serious players to enter the sector, provided the new norms increase the qualification criteria and make it more stringent that includes a serious evaluation process at DGCA, demonstrated ability to fund the business plan and start-up capital  equal to six months of operations without considering any revenue contribution,” said .

“Government must focus on only on key fundamental issues like removing  the negative fiscal regime, deliver an independent regulatory framework with a policy which is aligned to the needs of the industry, continuous focus on infrastructure and capacity building but allow market forces to operate freely without any intervention.  However, any new changes in the existing policy especially  for crucial issues like issuing of new licenses must be left to the decision of the new regime and CAPA  expects  the current regime  to fast track clearances of NOC for Tata-Singapore, air operating permit for AirAsia,  abolish the 5/20 rule (five years of local flying and a fleet of 20 aircraft) and more important, focus on ensuring compliance to FAA (US aviation regulator) shortcomings. Most of key strategic decision should be taken by the new regime in June,” he added.