Airlines looking abroad will need local management

The government may be considering a proposal to allow foreign airlines to make equity investment in Indian carriers, but it has laid down stringent ownership norms for domestic carriers wanting to fly overseas.

The aviation regulator, Director General of Civil Aviation, on Thursday specified that permissions for international operations may become hard to come by unless management control lies with Indian nationals.

As per the DGCA checklist, only airlines in which substantial ownership and effective control lies with either the government or with Indian nationals may be designated as international carriers.

“In addition to the ownership of the major part of the assets of the designated airline, (Government of India or Indian nationals) should also have effective control in the management of the designated airline and ownership and effective control of the major part of the fleet of aircraft and equipment of the designated airline,” the aviation regulator said.

According to aviation industry veterans, though these norms were loosely in place earlier too, the stipulation till now has been that 2/3rd of the directors on the airline’s board should be Indian. It does not specifically talk about management control being in Indian hands.

“Earlier there was no civil aviation requirement on the subject. DGCA would hold preparedness meetings with the concerned airline, checking verbally if it complied with all parameters. This checklist makes things very clear and specific,” they said.

Also, if an airline wants to appoint an expatriate as its CEO or in a prominent management position, it may now have to ensure that the expat reports into the Indian-controlled management structure.
The checklist comes just when low-cost carrier (LCC) SpiceJet is preparing to commence international operations and another LCC carrier, IndiGo, is close to flying to some overseas destinations.
As of now, Air India, Jet Airways and Kingfisher Airlines have international operations.

As per the existing norms, a domestic carrier must have completed five years of mandatory domestic operations and have a fleet of 20 aircraft before becoming eligible for foreign operations.

In the checklist issued on Thursday, the DCGA has also specified that proposed international flight schedules should be filed 30 days before commencement of scheduled services with details such as type of service, frequency, types of aircraft being used and flight timings.