AirAsia's Tony Fernandes To Invest More In India

Friday, 4th July 2014 at 03:43am

Tony Fernandes is known worldwide for his astute business skill that catapulted him to global stardom through his largest creation so far, the low-cost giant AirAsia.

In 2001, he bought a debt-laden government-owned airline for a token worth $1. He resurrected the heavily indebted airline to life with a new name and a new business model to boot, to start his low-cost airline which is known today as AirAsia.

In early 2013, Tony Fernandes proposed a joint venture to India's Tata Group and Arun Bhatia, to set up a new airline, which was later called AirAsia India. After more than a year of legal hurdles and controversies, the start-up finally took off on June 12 with its twin inaugural flights, both from Bangalore to Goa and Chennai.

Almost one month later, Tony Fernandes has hinted that he is interested in investing more in India on condition that his business wouldn't suffer the same feat that his airline venture entangled with in an agonizing 18 months.

To recall, BJP leader, Subramanian Swamy, came to the fore and called the joint venture as illegal, alleging that it violated the basic FDI law that the government has just amended in September 2012. He alleged that the newly-amended FDI policy is only applicable to existing airlines, not like AirAsia India which is a start-up. However, the court sided with the venture saying that it has the right to interpret its own rule.

As soon as the airline applied for an air operator's permit, another obstacle surfaced anew, this time from an alliance of local carriers, led by IndiGo, who banded together for the sole purpose of opposing its launch. They appealed to DGCA not to grant the airline an operator's permit and subsequently filed a case in high court to formalize their complaint.

But Tony Fernandes has learned to become patient in a country saddled with political bickering who must have prevented economic progress, including its aviation industry which is still in crisis.

Nonetheless, he considers to invest more in India by bringing his hotel business, Tune Hotels, through another joint venture with local partners. But this early, he already found a prospective partner for his budget hotel business and that's no other than Tata Group who also owns Ginger Hotels.

Ginger Hotels is a brand under Indian Hotels Co. Ltd. which also operates Taj Mahal Palace & Resorts. Tune Hotels, on the other hand, is a budget hotel brand under the Tune Group with properties across Southeast Asia and United Kingdom.

By: Pete Lee.