New Delhi, Nov 13 (PTI): Concerned over the possibility of loss-making Indian carriers cutting corners on safety, aviation regulator DGCA is considering penalising them if they compromise on the issue due to cash crunch.

However, the penalty may not be financial but aviation regulator DGCA could consider measures like disallowing defaulting airlines from expanding their fleet or operations till they started spending the right amount on ensuring aircraft safety, official sources said here today.

In extreme cases, the licenses of airlines, facing serious financial crisis that severely affects its capability to operate its full flight schedule, may not be renewed until they become capable enough to do so, they said.

With the situation facing beleaguered Kingfisher Airlines making headlines, the Directorate General of Civil Aviation has begun evaluation and monitoring of financial data of all Indian carriers to assess whether they were spending the required amount to meet all safety parameters including regular engineering checks of their fleet.

"The evaluation process would include collection of information through formal or informal channels and monitoring of indicators of change, which could impact the safety of aircraft operations," a senior official said, adding that financial surveillance would be carried out by three DGCA teams set up for the purpose.

The sources said unfavourable trends in an airline's financial condition could be found from various aspects of an airline's operations.

These include their financial stability, fleet reduction, aircraft utilisation, significant lay-off of personnel, delays in salary payment, declining training standards, demands for 'cash on delivery' by suppliers like oil firms, airport operators or other vendors and curtailment of flights.

The DGCA would also conduct a close scrutiny of the performance of pilots and engineers, the standards of maintenance and training programmes being carried out by the airlines and accident or incident rates.

With the rapid expansion of air services and most airlines facing a grave financial situation, it has become necessary to take appropriate action to ensure a high level of safety in aviation operations, the sources said.