AirAsia Operations in India Still Possible

Tuesday, 5th June 2012 at 05:03am

AirAsia Bhd is looking for a possible entry into India, the world's most populous country excluding China. This after the Indian government is reportedly allowing foreign carriers to claim stakes in Indian airliners who are badly in need of funds to keep afloat.

The Chief Executive Officer of AirAsia, Tony Fernandes, clarified that his airline would possibly enter into the South Asia's largest market if the government will relax its aviation policy.

At present, there's no provision in the policy that would make it possible for foreign investors, like AirAsia, to put up a joint venture with the local entity. If amendment is made to the current policy, the budget carrier would see it as a good sign to explore any possibilities

The CEO said that if opportunities come along, chances are, AirAsia would certainly take advantage of them. That is how the low-cost industry leader has built its units across Asia. He acknowledged the vast opportunities in India given its huge population.

Last Wednesday, AirAsia Bhd and All Nippon Airways Co. inaugurated its joint undertaking, AirAsia Japan Co. Ltd. The new unit is an addition to other existing no-frills budget airlines Thai AirAsia, Indonesia AirAsia and AirAsia Philippines.

India and China are said to be the two most lucrative markets in the world where travel business opportunities abound. Tony Fernandes recognized the significance of these two markets in the travel industry that he has long wanted to put up overseas units of his growing empire.

Mr. Anand Sharma, India's Minister of Commerce and Industry, admittedly said last month that discussions are ongoing between his office and the Indian aviation industry officials after the latter sent his office requests for the relaxation of its policy involving foreign ownership in the airline business venture.

Currently, only up to 49 percent ownership is allowed for a foreign partner in an airline joint venture in India. Furthermore, security is cited as a reason why foreign airlines cannot buy equity.

However, recently, the Indian government has worked on a proposal to relax its policy for foreign airlines' desire to buy up to 49% equity in Indian airlines.

The aviation industry in the country is saddled with huge losses, debts, pilot strike, and the closure of its operations overseas. Except for Indigo, all other five major airlines are in the red.

AirAsia is currently flying to five Indian cities from its hub in Sepang terminal. AirAsia X, a subsidiary, used to fly to Delhi and Mumbai before its suspension for some reasons.

Tony Fernandes also acknowledged that negotiations between his company and the Malaysia Airlines are in progress. Although he didn't elaborate more details, he admitted that their talks are going well.

By: Pete Lee.