AirAsia Maiden Flight Delayed

Tuesday, 11th June 2013 at 01:35am

AirAsia India may not be able to hit on target its planned maiden flight on September this year after all.

An airline official admitted that AirAsia needs at least six months to comply with the aviation regulations' requirements before it can start its operations.

AirAsia Bhd of Malaysia has teamed up with India's giant Tata Group to set up a local subsidiary in the country, called AirAsia India. The joint venture came on the heels of the recent deregulation on FDI in the country's aviation industry.

The government of India was forced to amend its policy on FDI after its commercial airlines suffered heavily from years of prolonged losses due to high operating costs. Seeing its airlines bleeding to death, the government immediately amended its FDI policy which now allows foreign companies to own up to 49% stake in a local airline.

AirAsia Bhd. is the first foreign airline company to set up a joint venture with a local company since the deregulation on FDI in the aviation industry took effect almost immediately last year.

The airline has already submitted to the aviation ministry a detailed plan that contains, among others, its main hubs and the number of fleet for its initial operations.

In its business plan, AirAsia India has identified Chennai and Kolkata as its two major hubs in the country. It will initially have a fleet of two Airbus A320s, gradually increasing to 36 planes in five years.

The entry of AirAsia in the India is expected to stir the local air travel market in a country of 1.2 billion people. As of late, Jet Airways made headlines across India and the region when it struck a deal with Abu Dhabi-based Etihad Airways for the latter's purchase of 24% stake on the former.

A government official said, however, that the airline missed to indicate in its plan the key people who will run the company. Tony Fernandes, the founder of Asia's largest budget carrier, has already mentioned in the past that the top posts will be reserved to Indian nationals.

He also said that it will take them, at least, six months after it receives NoC (No Objection Certificate) from the government to accomplish all the requirements by the aviation regulators before they can start operations.

The present condition shows that AirAsia wouldn't be able to commence operations in September as planned. It has yet to receive its NoC from the ministry and it usually takes up to four months of waiting. Once it receives the NoC, it will have to wait another four months to get its license.

AirAsia bigwig, Fernandes, has already announced that Mittu Chandilya will take the helm of its Indian subsidiary. Though, he didn't provide the rest of the management team.

Though the majority stake is owned by Indian nationals at 51%, AirAsia Bhd. still holds a controlling stake in AirAsia India with its 49% stake in the company. The rest or 51% stake of the joint venture is divided between Tata Sons (30%) and Telestra Tradeplace's Arun Bhatia (21%).

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