AirAsia Told to Get License

Wednesday, 24th April 2013 at 10:58am

The Civil Aviation Ministry has said it clear that AirAsia India should get a license first before they can start their operations.

This was raised by the office of the aviation ministry during their meeting held on March 6. The Foreign Investment Promotion Board (FIPB) of India recently approved the joint venture between the Tata group and Malaysia-based AirAsia to form a local subsidiary in the country.

According to K N Srivastava, India's civil aviation secretary, AirAsia should formally set up the company, first and foremost, then secure a license from the ministry in order to start operations. He also said that the applicant should obtain a clearance certificate from the Department of Industrial Policy and Promotion (DIPP) as per requirements from the government on foreign direct investments (FDI).

A DIPP representative has clarified that the FDI Press Note 6 referred not only to existing airlines but applies to all future airline ventures. He added that during the meeting, the new FDI policy was thoroughly explained delineating the distinction between the brownfield and greenfield projects. Hence, formal clarification from the office is not necessary anymore. Moreover, the main objective of the newly-amended FDI policy is to get fresh capital infusion to the local aviation industry, or any local industrial sector, for that matter.

Based on the newly-amended FDI policy, a foreign investor is allowed to own up to 49% stakes of a local airline corporation. The Tata-AirAsia joint venture is the first such corporation to form under the new policy. The leading budget carrier is also the first foreign carrier to set up a joint venture with an Indian partner to form a new airline.

Though AirAsia Bhd holds only 49% stakes in the new airline, AirAsia still holds a controlling stake as Tata group only holds 30% of the total shares. The remaining shares, 21%, is held by Telstra Tradeplace, making AirAsia India a foreign-controlled airline.

What AirAsia would do next is to apply for a license to operate from the Directorate General of Civil Aviation (DGCA) and secure further clearances from the office.

The Directorate General of Civil Aviation (DGCA) office shall ask the new airline to furnish them detailed information as regards to aircraft and its airworthiness, pilots and general safety measures, among others. The DGCA office will issue the clearance only after they are satisfied with their assessment on the airline based on that information.

The new airline is planning to locate its base in Chennai. It will serve the southern part of India for its initial operations.

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