Mittu Chandilya Wonders Why SpiceJet Attacks AirAsia India
Friday, 3rd October 2014 at 03:53am
The commercial aviation industry in India went through years of financial crisis when most of its players succumbed to huge losses and indebtedness, which is still unabated until now since 2006.
When AirAsia Bhd. of Malaysia announced its partnership with the Tata Group in February 2013 through a joint venture to set up a local subsidiary in India, local airlines, including SpiceJet, were hardly amused.
The news made headlines in India that sent an alarm to existing local airlines, as it will potentially threaten their market share and overall operations.
They (existing airlines) then grouped together and created an alliance to oppose AirAsia's entry in India and filed a petition against the newly-formed company. They alleged that the joint venture violated the newly-amended FDI law and demanded to invalidate the venture.
In September 2012, the Indian government amended its FDI law pertaining to foreign ownership of a local airline venture. The newly-amended law allows foreign investor to own up to 49% stakes in a local airline. Before the amendment of the FDI law, foreign ownership was limited up to a maximum of 24% only.
The alliance called FIA (Federation of Indian Airlines) alleged that AirAsia India is not a legal business venture because they argued that it has not satisfied the provision that requires foreign ownership in an existing airline only. Being a new airline, AirAsia Bhd., therefore, is not allowed to enter into such partnership to set up a new airline in the country.
The petition was rejected by the Directorate General of Civil Aviation in India stating that it has the right to interpret its own rule if it wants to. The suit that it has filed with the Federal Court in Delhi, however, is still to be heard.
The hostility of SpiceJet towards AirAsia India must be part of the FIA's ongoing and collective opposition to the latter's presence in India.
Mittu Chandilya has been civil about criticisms hurled at him and his airline via social media by its rivals who have been vocal about their opposition against AirAsia's entry in India.
Lately, an email from SpiceJet's Sanjiv Kapoor was leaked out to the media taking potshots at him but he chose to not respond to it.
By: Pete Lee.