India Proposes Airline Health Score for Creditworthiness

India has proposed a standardized Airline Health Score to assess airlines' creditworthiness, submitted to the International Civil Aviation Organisation. The initiative targets improved risk management at airports, emphasizing credit-based terms. The framework would address financial challenges faced by smaller carriers in a rapidly growing aviation market.

India has proposed the development of a standardized creditworthiness evaluation system for airlines, aiming to introduce tiered, risk-based payment terms to airports. The suggestion is part of a working paper presented to the International Civil Aviation Organisation (ICAO) ahead of its 42nd General Assembly scheduled to commence on September 23.

Emphasizing the urgency of a unified Airline Health Score (AHS), India highlighted that a considerable portion of airport revenues, particularly in developing nations, is dependent on aeronautical charges often accrued on a post-service credit basis. This puts financially distressed airlines at a disadvantage, burdening airport operators with significant financial risks.

The proposed AHS framework would enable better risk management and contract negotiation, and ICAO is urged to consider a formal study involving IATA, ACI, states, and financial institutions to develop this tool, which aims to aid dispute resolution and provide transitional support for financially stressed airlines.

(With inputs from agencies.)