AirAsia gets Indian government’s nod to start new airline

New Delhi/Kuala Lumpur : Malaysian budget carrier AirAsia Wednesday received regulatory approvals from the Foreign Investment Promotion Board (FIPB) for starting a new airline venture in the Indian civil aviation sector with partners like the Tata Group and Arun Bhatia promoted Telestra Tradeplace.

“The good always win. People and companies with good intentions to create jobs and make life of the average man better will always win,” an elated Tony Fernandes, Air Asia’s Indian origin founder and chief executive, tweeted.

“Thank you all. AirAsia – Tata India airline proposal gets government nod.”

In its proposal sent to the FIPB last month, the company had said that it intends to hold 49 percent stake in the venture, which will include industrial conglomerate Tata Group and Telestra Tradeplace.

The Malaysian budget carrier intends to invest anywhere between $30 million to $60 million in the airline venture.

When contacted a senior finance ministry official told IANS: “The proposal has been accpeted under merit and policy.”

However, the civil aviation ministry had earlier sort a clarification from FIPB on the new foreign direct investment policy in the domestic airline sector.

The ministry wanted to know whether the new rules were exclusively for existing domestic airlines or even for new start-ups.

Tata Sons will hold 30 percent in the airline and will also have two board members, while Telestra Tradeplace, which will hold a 21 percent stake, will be represented by Bhatia.

The sixth board member will be an Indian national and appointed as a non-executive chairman of the board. Fernandes on Tuesday further twitted that he has chosen an Indian to lead the airline, as per law.

“I have selected our CEO (chief executive) for Airasia India. Very smart boy from the south, madras. An amazing CV (curriculum vitae). Will impress all,” Fernandes said in a tweet.

According to the low-cost carrier (LCC), the JV plans to operate from Chennai and will focus on providing connectivity to smaller cities. It plans to start operations by the end of 2013.

AirAsia said it is confident to replicate its successful business model in India which it delivers in Malaysia, Thailand, Indonesia and other JVs.

The Tata Group has so far not said anything on the development. Incidentally, India’s first carrier was Tata Airlines, which took flight in 1932. In 1953, it was nationalised and renamed Air India.

The Tatas had earlier tried to start an airline with Singapore International Airlines in the mid-1990s, but could not succeed.

The other partner, Arun Bhatia, runs an aviation parts manufacturing firm, Hindustan
Aerosystems, from New Delhi.

AirAsia has a fleet of 118 aircraft and has ordered 350 planes to service its network. Currently, AirAsia through its operations based in Thailand and Malaysia operates in Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata.

Last year, the government allowed foreign airlines to invest up to 49 percent in private domestic carriers.

The foreign carriers were so far not allowed to directly invest in Indian carriers for security reasons although 49 percent FDI by non-airline players was allowed.