Wednesday, December 25, 2019

Tatas to control AirAsia India: Story behind

From now onwards, all the core operations, including commercial, finance, training and operations of AirAsia India will be directed independently by Tata Sons, not its Malaysian parent, AirAsia Berhad, holding 51 and 49 per cent shares respectively.

This happened after both companies agreed to amend a controversial brand licensing agreement, which was signed in 2013, and handed power and rights to use the AirAsia brand.
However, it was mired in controversy as key decisions needed approval from the parent. Besides, this also raised concerns that the daily management was being handled by foreign nationals. India’s civil aviation regulations mandate the effective control of airlines jointly owned by Indian and foreign entities lie with the Indian firm.

People in the know said both entities were finalising the revised agreement. A draft agreement submitted to the Ministry of Civil Aviation and reviewed by Business Standard says that sales and distribution, revenue management, network planning, catering and in-flight services, finance and corporate finance, customer experience, engineering, and leasing contracts will now be under the sole discretion of AirAsia India.

These require approval from the parent under the present agreement. A spokesperson of AirAsia Berhad directed the queries to the Indian unit, but the AirAsia India spokesperson refused to comment.

In case you don’t know, AirAsia Berhad has similar agreements with the other three affiliates — Thai AirAsia, Philippines AirAsia, and Indonesia AirAsia. These, along with AirAsia India, pay annual fees for using the AirAsia brand.

In view of this recent move, a Tata group executive said and I quote “Earlier, a lot of core functions such as revenue management, sales, and leasing needed expertise of the joint venture partner, but now the airline is fully capable of handling the functions.”

The Tatas have already appointed key executives from its group firms in Air Asia India. In 2018, it appointed Tata lifer Sunil Bhaskaran as chief executive. Last month, it appointed Titan’s Vikas Agarwal as chief financial officer. And has appointed Tata Steel executive Ranganathan R advisor to the CEO, recently.
25/12/19 Kanishka Gupta/Business Standard
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