DGCA plans financial audit of airlines


As losses of airline’s mount, the aviation regulator is planning to conduct a financial audit of Indian carriers to check if their poor fiscal health is not affecting safety of passengers. A senior directorate general of civil aviation (DGCA) official said the audit could start next month itself.

The DGCA has conducted these audits in the past too. The audit conducted in 2011-end identified Kingfisher as a distressed airline, which eventually shut down in October 2012, reports Times of India. In this audit, the regulator asks Indian carriers to submit their financial details and answer a list of questions like if they are buying spares or cannibalizing planes and if they are paying salaries in time. An airline with “substantial findings”, read which is proven to be in financial distress, has two options — either operate a smaller fleet with full safety or shut down.

Since the last audit, the losses and debt of airlines have only mounted with IndiGo being the only consistently profitable airline. According to the Centre for Asia Pacific Aviation, collective industry losses of past seven years till March 2014 are $10.6 billion and their combined debt is $15.8 billion. Airlines have collectively lost $1.7 billion in FY14, a figure that will be lower for FY 2015 due to fall in fuel price.


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