Tuesday, March 12, 2013

Things that may halt AirAsia's takeoff in India

New Delhi: Even though the proposed AirAsia-Tata joint venture (JV) got Foreign Investment Promotion Board (FIPB) approval last week only, it will be interesting to see how this proposal sails through in the civil aviation ministry as there have been some points of contention over this issue already.
Under the JV, AirAsia will have 49% stake, Tata Sons 30% and Delhi based real estate player Arun Bhatia 21%. However, operation control over the airline will be with AirAsia and Tatas have made it clear that they will only be investors. The next big challenge will be to get a no objection certificate from the ministry and an air operator's permit from the DGCA which could take up to six months.
Firstly, FIPB approved of this proposed Joint venture even as the civil aviation ministry raised some issues over  this if the new guidelines applied only on foreign carriers investing in existing domestic ones or even those setting up joint ventures for greenfield operations.
DIPP's press note 6 on the issue had read: "Foreign airlines are allowed to invest in the capital of Indian companies, operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital.
13/03/13 Disha Kanwar/Business Standard