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Bleeding airlines may be asked to go for audit
December, 11th 2009

With airlines deep in red and reports of dues to employees and vendors becoming common, the government may soon subject them to a detailed financial audit. Aviation minister Praful Patel on Thursday told Parliament that the DGCA had recommended such an exercise for airlines "in deep financial distress".

He also added that the DGCA has suggested linking fleet expansion plans of such carriers to their capability of complying with all regulatory norms.

"The DGCA carried out financial condition and rapid growth/downsizing assessment of schedule domestic airlines in April 2009 to ensure that safety oversight functions of airlines are not compromised," Patel said in Lok Sabha.

The TOI had reported this exercise in September that was undertaken to see if cash-strapped airlines were cutting corners on aircraft maintenance and hence endangering lives.

Following the exercise, the DGCA found that two of the three biggest Indian carriers were in deep financial distress. It suggested to the aviation ministry such carriers should not be allowed to induct more planes before meeting all air safety norms for existing fleet.

In a first of its kind fallout of this exercise, a regional carriers decided to close operations for a while to comply with all norms for its fleet. Such a thing is common in the west, especially the US.

Given the poor financial health of airlines, the DGCA is learnt to be keen to ensure that passenger safety is not compromised. A number of notices have been issued to airlines on this issue so far.

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