Commercial Aircraft
The Indian aviation sector has witnessed remarkable growth and transformation in recent years, positioning itself as one of the fastest-growing markets globally. With an expanding middle class and increased connectivity, there is a burgeoning demand for air travel, offering promising opportunities for entrepreneurs interested in venturing into the scheduled airline business. We provide a detailed guide on how to start scheduled airlines in India, including the essential procedures regulated by the Directorate General of Civil Aviation (DGCA).
The Outlook of the Aviation Sector:
India's aviation sector has become a critical component of the country's economic development, fostering connectivity, tourism, and trade. Factors such as increasing disposable income, urbanization, and government initiatives like UDAN (Ude Desh Ka Aam Nagrik) for regional connectivity have contributed to the sector's growth. The emergence of low-cost carriers, technological advancements, and a liberalized policy framework further amplify the potential for new entrants in the scheduled airline segment.
Key regulatory bodies governing the sector: The aviation industry operates within a highly regulated framework, where various entities fulfill distinct roles, encompassing tasks ranging from registrations and airport maintenance to establishing security standards. The following outlines a list of the diverse authorities and their respective functions in overseeing the sector:
- Ministry of Civil Aviation (MoCA)
- Directorate General of Civil Aviation (DGCA)
- Bureau of Civil Aviation Security (BCAS)
- Airports Economic Regulatory Authority of India (AERA)
- Airports Authority of India (AAI)
Minimum Requirements for Grant of Air Operator Certificate to Operate Scheduled Air Transport Services (Passenger).
Introduction:
In simple terms, according to the rules for aircraft in 1937, if anyone wants to run a scheduled air transport service in, to, from, or across India, they need permission from the central government. This permission is granted by the Directorate General of Civil Aviation (DGCA), and it's called an Air Operator Certificate.
This document, known as the Civil Aviation Requirement, outlines the basic conditions that must be met to get this certificate for operating scheduled air transport services for passengers. These conditions work alongside the international standards set by the International Civil Aviation Organization (ICAO), specifically in Annex 6 Part I & Part III. The issuance of this document is in line with Rule 133A of the Aircraft Rules from 1937.
DEFINITIONS
‘Air Operator Certificate (AOC)’ means certificate authorizing an operator to carry out specified commercial air transport operation ‘Operator’ means a person, organisation or enterprise engaged in or offering to engage in aircraft operation and includes an AOC holder as well as an applicant for grant of AOC for undertaking scheduled air transport service.
‘Scheduled air transport service’ means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public.
ELIGIBILITY REQUIREMENTS
Air Operator Certificate (AOC) for operating Scheduled Air Transport Services shall be granted only to a person or a company or Body Corporate meeting the requirements specified in Schedule XI to the Aircraft Rules, 1937, as amended from time to time.
Indian Citizen:
Individuals who are citizens of India.
Company or Body Corporate:
Registered entities with their main base of operations in India.
Entities whose chairman and at least two-thirds of Directors hold Indian citizenship.
Entities where substantial ownership and effective control are in the hands of Indian nationals.
The applicant shall meet the paid-up capital requirements as prescribed below:
(i) Airlines operating with aircraft with maximum certified take off mass equal to or exceeding 40,000 kg.
a) Upto 5 Aircraft – Rs 50 crores
b) for each addition of up to five aircraft, additional equity investment of Rs 20 crores will be required.
(ii) Airlines operating with aircraft with maximum certified take-off mass not exceeding 40,000 kg.
a) Upto 5 Aircraft – Rs 20 crores
b) for each addition of up to five aircraft, additional equity investment of Rs 10 crores will be required
For foreign investors, the limitations and other requirements outlined in the Foreign Direct Investment (FDI) policy for the sector will be applicable. The provisions of FDI policy from Government of India and guidelines from Ministry of Civil Aviation in this regard shall be followed for any foreign direct investment (FDI).
Procedure:
This process is applicable for obtaining permits for both scheduled and non-scheduled services, as well as cargo. However, the required documentation, fees, and other details may vary. Specific information for each type of service offering can be found in the relevant Civil Aviation Requirement (CAR).
To initiate the process, an applicant desirous of obtaining an AOC for undertaking Scheduled Air Transport Services shall apply for No Objection Certificate (NOC) to the Ministry of Civil Aviation, New Delhi, in the proforma prescribed in Annexure-I. This application should be accompanied by the prescribed fees and various documents, including the Draft Security Model, Composition of the Board of Directors, Certificate from a Chartered Accountant, Feasibility Report, Ownership pattern, Human Resources and maintenance support, etc.
The applicant needs to provide necessary information for the import of aircraft, adhere to all mandatory Airworthiness Directives, and demonstrate to the DGCA that all equipment is installed according to prescribed regulations.
Moreover, the applicant must ensure compliance with operational requirements and adhere to the specified routes outlined in the Route Dispersal Guidelines.
Once the pre-application phase requirements are fulfilled, the applicant can proceed to submit the formal application for obtaining the Air Operator Certificate/ Permit. This application should include details such as the particulars of the aircraft to be used, certificates of registration and airworthiness of the aircraft, information about organizations responsible for aircraft maintenance, licenses of pilots and engineers, and comprehensive insurance policies covering passengers and other risks. Additionally, the financing pattern for leasing or obtaining aircraft should be outlined in the application.
We at BizAv provides step by step guidance to Start Scheduled Airlines in India:
Feasibility Study:
Conduct a comprehensive feasibility study to assess the market demand, competition, and potential routes.
Analyze the financial viability, considering factors such as operational costs, ticket pricing, and revenue projections.
Business Plan:
Develop a robust business plan outlining your airline's vision, mission, and operational strategy.
Detail your fleet selection, target routes, marketing approach, and customer service standards.
Legal Structure:
Choose a suitable legal structure for your airline, such as a private limited company.
Ensure compliance with the Companies Act and other relevant regulations.
Fleet Acquisition:
Acquire aircraft suitable for your operational needs and budget.
Comply with DGCA regulations regarding aircraft type, maintenance, and safety standards.
Air Operator Certificate (AOC):
Apply for an Air Operator Certificate (AOC) from the DGCA.
Demonstrate compliance with safety, security, and operational requirements.
Infrastructure and Facilities:
Develop or secure access to necessary infrastructure, including airports, hangars, and maintenance facilities.
Establish partnerships with ground handling services, catering providers, and other essential service providers.
Human Resources:
Recruit and train qualified staff, including pilots, cabin crew, ground staff, and maintenance personnel.
Ensure compliance with DGCA regulations on crew qualifications and training programs.
Marketing and Branding:
Implement a comprehensive marketing strategy to promote your airline and attract passengers.
Establish a strong brand identity to differentiate your airline in the competitive market.
Operational Compliance:
Regularly update and adhere to DGCA regulations related to operations, safety, and security.
Conduct regular audits and inspections to ensure ongoing compliance.
Launch and Expansion:
Execute a successful launch, emphasizing safety, reliability, and customer satisfaction.
Explore opportunities for route expansion and additional services.
Starting scheduled airlines in India is a challenging yet rewarding endeavour, given the dynamic growth of the aviation sector. Diligent planning, adherence to regulatory procedures, and a commitment to safety and customer service are key to success. Aspiring entrepreneurs should navigate the regulatory landscape with a thorough understanding of DGCA requirements, ensuring a smooth take off into the vibrant skies of India's aviation industry.
