Tuesday, March 29, 2016

Can Tata Sons steer AirAsia India out of turbulence?

Mumbai: On Monday, Tata Sons announced that it will raise its stake in AirAsia India to 49 per cent from 41.06 per cent by buying out co-promoter Arun Bhatia's stake in the airline. This makes it an equal partner with AirAsia, the Malaysia-headquartered low-cost airline founded by Tony Fernandes, but what has tipped the scales in favour of the Indian company is that the remaining 2 per cent is held by Tata loyalists S Ramadorai (0.5 per cent) and R Venkatramanan (1.5 per cent).
The writing on the wall is clear: Tata Sons will now pilot AirAsia India.
There is no official word on what caused this change to happen. What is for sure is that this will silence the campaign mounted by the Federation of Indian Airlines, a lobby group of older airlines including IndiGo and Jet Airways, that questioned AirAsia India's commitment to the domestic market because its largest shareholder, AirAsia, was an overseas company.
The charge stung and had to be rebutted by none other than Tata Sons Chairman Emeritus Ratan Tata who said in a tweet on February 14 that the new airlines have been "formed in full compliance with the prevailing government policy."
Rivals have accused Fernandes of remote-controlling the airline from Malaysia in violation of the government's norms for the sector. Indeed, it was Fernandes who announced the appointment of AirAsia India's first CEO, Mittu Chandilya, as well as his successor, Amar Abrol, at the Hyderabad Air Show earlier this month. With Tata Sons in the cockpit, this could change.
29/03/16 Aneesh Phadnis/Business Standard
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