Airlines may face entry barriers

New Delhi: Taking on the budget carriers, full-service airlines today demanded that the government should regulate prices and suggested that higher entry barriers for new players could be a way out of the present financial cauldron facing the industry.
The move, however, was vehemently opposed by budget carriers, which stated that the excess capacity was only a temporary phenomenon and would pass as the market grew on lower fares.
The government, which called a meeting with airlines to work out a method to solve the sector’s financial problems, told the carriers that it would not interfere in pricing, which will be left to market forces.
The government, on its part, is planning a slew of steps to bring financial health back into the sector. The government is putting stiff conditions on the entry of new airlines that want to fly in the domestic skies.
These include enhancement of the minimum paid-up equity capital requirement, prior approval of business and fleet plans before permission is given to fly and directly linking an increase in fleet size with a commensurate increase in the paid-up equity capital norms laid out for carriers.
29/09/06 Business Standard

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