Skies clear up for Tata-Air Asia plan

With FIPB nod in place,  AirAsia joint venture would now have to approach DGCA for further clearances and a scheduled air operator’s permit which allows an airline to begin flying.

Skies clear up for Tata-Air Asia plan

Mumbai : Malaysian budget carrier AirAsia’s bid to launch an airline in India by joining hands with Tata Sons was on Wednesday cleared by the Finance Ministry, the first such investment by a foreign carrier.

With the clearance from the Foreign Investment Promotion Board (FIPB), the AirAsia joint venture would be the first entry of a foreign carrier in the domestic aviation sector after the liberalisation of FDI policy in September last year.

AirAsia has announced it would set up a 49:30:21 joint venture with Tata Sons and Telestra Tradeplace of Indian investor Arun Bhatia to launch a new Indian airline.

A senior government official said the initial investment by the joint venture would be Rs 80 crore.

The new venture will mark the return of the Tatas to the aviation sector. State-owned Air India had grown out of Tata Airlines, which began flights in 1932.

According to the low-cost carrier (LCC), the JV plans to operate from Chennai and will focus on providing connectivity to smaller cities with 3-4 planes initially.

Procedural problems likely: Ajit Singh

However, the Civil Aviation Ministry has sought clarity on FDI policy and wanted to know whether the new rules were exclusively for existing domestic airlines or even for start-ups. “The Commerce Ministry should change the rules to bring about clarity. Overall, I don’t see a problem in the AirAsia joint venture. Our Ministry will see of the joint venture adheres to the laid-down rules,” Civil Aviation Minister Ajit Singh told reporters.

“There are some procedural problems…. The notification says (investment by a foreign airline in) an Indian carrier. So they (investor) have to follow the procedure because the Cabinet took a decision, following which the Commerce Ministry issued the notification,” he said.

When the AirAsia joint venture applies to the Civil Aviation Ministry, aviation regulator Directorate General of Civil Aviation (DGCA) and other agencies would look into a variety of issues including the issuance of a No Objection Certificate (NOC) for launching of air operations and Scheduled Operator’s Permit (SOP).

Before granting it the NOC and SOP, the Ministry would also have to see whether all procedures have been followed, including whether two-thirds of the Directors of the company’s Board were Indians and the directors were security-cleared.

Tata as Chairman?

Some media reports, late on Wednesday,  quoted  Arun Bhatia, co-founder of AirAsia India as saying that he is trying to persuade Ratan Tata to be chairman of the proposed airline.

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