» Business » Centre clears sixteen airlines but only two take off

Centre clears sixteen airlines but only two take off

By Aneesh Phadnis
October 22, 2014 08:22 IST
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The civil aviation ministry received 20 applications and it granted NOCs to sixteen companies between 2009 till now

Though the civil aviation ministry has given no-objection certificates (NOCs) to 16 companies to launch airlines in the past five years, only two - AirAsia India and Air Costa - have taken off so far.

Data secured from the ministry under the Right to Information Act show the ministry received 20 applications and it granted NOCs to 16 firms between 2009 and now.

The 16 include Vistara, Zexus Air Services, Air One, Premier Airways, Turbo Megha, Air Carnival and Zav Airways, which were granted an NOC in 2014.

Securing an NOC from the aviation ministry is the first step towards launching a scheduled airline. Upon receiving it, companies need to secure a permit from the Directorate General of Civil Aviation to start operations.

The NOC is valid for 18 months and is issued for both regional or national operations. While AirAsia holds a national permit, Air Costa has a permit for regional operations.

Ministry data show it extended the validity of the NOC of three companies. It also reveals NOCs granted to three companies lapsed as the firms failed to take the necessary steps to obtain a permit within the 18-month period. However, the companies applied for NOCs afresh and one of them secured the NOC again.  Aviation experts say a mix of reasons including the financial crunch of promoters and inability to comply with the technical requirements make it difficult for companies to secure a permit. Entry barriers and the rules on import of five aircraft in a year for licence validity, and route dispersal guidelines mandating flights on certain regional routes, are also seen as impediment.

Kapil Kaul of the Centre for Asia Pacific Aviation, said: “Receiving an NOC does not mean a company can start operations. Lack of funding and inadequate knowledge of the aviation sector make it difficult for companies to secure operations permit. The conversion of an NOC to an operations permit is an increasingly complex process and can take up to a year and, in certain cases, more than a year. We see Air One and Premier Airways getting operational in a year. Market conditions continue to remain hostile and new start-ups need very strong levels of capitalisation.”

It takes more than an NOC to fly

Number of applications for NOCs - 20

16 companies got NOCs: Freedom Aviation, Indus Airways, Ligare Aviation, Karina Airlines, Air Pegasus,  LEPL (Air Costa), ABC Aviation & Training, North East Shuttles, AirAsia India, Tata Singapore Airlines Limited (Vistara), Zexus Air Services, Air One Aviation, Premier Airways, Turbo Megha Airways, Air Carnival, Zav Airways

Air Costa and AirAsia India got NOC and secured permit from DGCA

NOCs of Karina Airlines, Freedom Aviation and ZAV Airways lapsed. All of them applied again. Only ZAV Airways was granted NOC this time

Validity of NOCs of ABC Aviation, Indus Airways and Air Pegasus was extended

Note : NOCs were granted for both regional and national scheduled air services. The ministry data does not include Religare group's Air Mantra which ran scheduled regional service between Amritsar and Chandigarh for eight months during 2012-13. The service was later suspended. Religare group did not reply to queries on Air Mantra's operations permit.
Source:  Ministry of Civil Aviation

According to IndiGo's former head of operations Shakti Loomba, the DGCA checks whether companies applying for permit has the management set-up, infrastructure at key bases and the financial ability to start an airline. “Companies at times do not go forward with their plans as they are unable to raise capital. The start-up costs of an airline are high and companies can require up to Rs 100 crore in start-up capital,” he added.

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Aneesh Phadnis in Mumbai
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