Further expansion of flight operations and aircraft fleet of airlines may now be stopped if the DGCA finds that the financial condition of the airline is affecting air-safety standards. Indicators of financial distress, according to the DGCA, includes sacking of staff and delayed payment of wages. The DGCA is planning to make it mandatory for all airlines now to submit certain financial details at the end of every year to ensure that financial distress does not affect air safety. “In view of adverse financial condition of airlines, ... there is a need to carry out ‘evaluation of air carrier’s management of significant changes’ to identify airlines in distress either due to financial issues or operational issues so as to ensure that safety oversight functions are not affected ...,” the DGCA has stated in a draft issued on Friday. The draft is likely to be discussed with airlines. “In recent times when the airline industry world over has passed through turbulent times, airlines have reported heavy financial losses. A few airlines have also laid off their employees and reduced air services with a view to rationalise the route structure,” the DGCA has pointed out.
The DGCA’s list of “possible unfavourable trends in the operator’s financial condition” include “significant lay-offs, delays in meeting payroll, reduction of safe operating standards or evidence of cutting corners, demands for cash on delivery by suppliers who formerly granted the operator credit, reduced frequency of revenue flights and sale or repossession of aircraft”.
The “assessment indicators” to be filled in by airlines and submitted to the DGCA include financial details such as those on deferment of discretionary spending on capital expenditure, training and advertising, sale of aircraft and aircraft acquisition details.
the DGCA is also planning to make it mandatory for all computer reservation systems available with airlines and travel agents to have an integrated display showing fares and availability of all airlines.