DGCA slows down Gopinath's low cost airline plans

Captain G Gopinath’s plans to re-enter the aviation space with a low cost airline may have hit a speed breaker with the Directorate General of Civil Aviation (DGCA) not giving clearance yet due to the financial records of the now defunct Deccan 360.

Sources have told CNBC TV-18 that the DGCA has raised concerns over the financial conditions of Gopinath’s past businesses, notably Deccan 360, and is presently studying the business condition of his past businesses.

[caption id=“attachment_305553” align=“alignleft” width=“380” caption=“The airline plan has received clearance from the Ministry of Civil Aviation. Reuters”] [/caption]

The authority has expressed reservations in granting a flying license to Gopinath’s planned airline despite him receiving an NoC from the Aircraft Acquisition Committee of the Ministry of Civil Aviation in April 2012.

DGCA DG Bharat Bhushan said,“We are examining the proposal and have not given clearance yet. Gopinath will have to give preparedness report, based on that we will take a call. There are certain concerns we have raised.”

The DGCA has raised certain concerns on plans of Gopinath for wet leasing aircraft, the sources said.

Gopinath’s last business venture, Deccan 360 made huge losses. The business had been abandoned with salaries to employees not being paid and with dues pending to lenders and business associates.

The logistics firm had an investment of Rs 115 crore from Reliance Industries Limited (RIL) and had a debt of Rs 500 crore. However, following the poor financial condition of the airline RIL had written off 90 percent of its investment in FY12.

Gopinath, who was a pioneer of the low-cost flying experience in India, had founded Air Deccan in 2003. Kingfisher’s Vijay Mallya bought 26 percent stake in Air Deccan in 2007 at Rs 550 crore and eventually took over the airline.

When contacted Gopinath did not respond to the channel’s queries.