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Airlines will need miles, not years to fly abroad

Flights to scheduled and remote areas will have a multiplier for credits.

New Delhi |
Updated: January 15, 2015 1:13:02 am

By: Sharmistha Mukherjee

Domestic airlines seeking permits to fly overseas will now be required to earn that right by providing connectivity to underserved and unserved areas, according to new norms outlined in the revised aviation policy to promote regional and remote area air connectivity.

Under the current norms, Indian airlines are required to have a minimum fleet of 20 aircraft and five years of operational experience (known as the 5/20 rule) for starting international services.

As per the new policy, Indian airlines would be able to start overseas services if they have a minimum fleet of five aircraft and have accrued sufficient credits by deploying capacity on domestic routes.

“An airline desiring to fly on international routes must have accrued a minimum of 200 crore DFCs (domestic flying credits) for initial designation on international route,” the civil aviation ministry has noted in a presentation made before stakeholders on January 8.

Operational data shows that an airline with five aircraft of size A320 can accrue 150 crore DFCs in a year and with multiplier effect 200 crore DFCs in the same period.

A part of this requirement could be met by purchasing credits from other operators as the ministry is examining the possibility of allowing scheduled airlines to purchase 25-20 per cent of DFCs.

The credit formula devised by the civil aviation ministry effectively implies that once put into practice, scheduled airlines would be able to commence international operations within a year of start of domestic service.

“The new policy is designed such that new airlines establish their credentials on domestic routes for a year. They need to have accident/incident-free operations. After that they can start flights overseas,” a senior official in the ministry said.

Air transport operators would earn one credit per passenger kilometer flown on Category-I routes, three and five credits, respectively, per revenue earning passenger kilometer flown on Category-II and Category-IIA routes, and five credits for flying to unused airports.

The official added, “The multiplier will encourage operations to remote, intra-remote and unutilised airports. Operators of small aircraft can fly to these places and sell credits to scheduled airlines ensuring operational viability of both involved.”

The proposed formula will apply to new airlines and for allotting new routes to old airlines. A dedicated software will be used for calculating DFCs.

The civil aviation ministry has invited comments from stakeholders and will notify the final policy post a consultation meeting on January 22.

Further, to incentivise non-scheduled operators (NSOPs) to fly to regional and remote towns, the ministry has said it will allow them to publish their schedules and operate regular flights to any region but only to and from one metro airport.

Jet chief not to reduce stake in firm below 51%


NEW DELHI: The stock price of Jet Airways on Wednesday went up by 0.11 per cent to trade at Rs 464.75 a piece on the BSE after the airline issued a clarification that media reports regarding chairman Naresh Goyal pledging his 51 per cent stake in the airline to Punjab National Bank (PNB) is “factually inaccurate and incorrect”.

The airline, in a statement said, “…the undertaking given to PNB implies that the airline’s Promoter and Chairman will not dilute his equity, by way of a sale, below 51 per cent at any time… It is thus, an undertaking of non-disposal of any further equity and not a matter of pledging of his shares.”

A BSE disclosure by Jet Airways, however, shows that Goyal had created pledge on his entire 51 per cent holding, as on January 8, 2015.

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