Tony Fernandes, Chief Executive Officer (CEO) of Air Asia, largest low cost carrier in South East Asia, is expected to visit India by the end
of this month; just weeks after 49 per cent Foreign Direct Investment (FDI) approval in aviation sector.
In an email reply, Fernandes said, “Will be in India at the end of the month and will try to meet all of the press.”
Notably, shortly after cabinet approved FDI, he tweeted, “Fantastic news that India has opened up investment to foreign airlines. With Malaysia opening up this is fantastic news for airlines like Air Asia. Great that Indian government has put people first.”
However, according to Reuters, Fernandes, while addressing Singapore press, said he had no immediate plans to enter the market because he thought the aviation fuel tax and airport charges were still too high.
This time, Fernandes seems to be taking cautious moves after fizzing out of all excitement shown by Air Asia when they entered the Indian
market in 2010. Seldom had any airline expanded at such a speed then.
Air Asia was flying to nine destinations across the country and has over 120 flights a week (to and fro) in operation. Later, they
withdrew flights from New Delhi and Mumbai, attributing it to high operating costs that include high airport and fuel charges.
However, FDI is expected to boost investor sentiment in the long term. According to Centre for Asia Pacific (CAPA) analysis, “The floodgates
of investment are unlikely to open in the short term but from the perspective of improving sentiment and demonstrating that the government is committed to supporting the development of a viable airline industry, this is a positive milestone.”
Though there were also concerns raised by industry in Beijing in International Air Transport Association (IATA) conference if 49 per cent stake would give them the power to exercise free control in managing affairs. But for them also, there is a ray of hope with greenfield joint ventures.
If the Government is serious about granting new licences to well-funded, professional start-ups, we could in due course see the launch of greenfield joint ventures by carriers such as AirAsia, Jetstar and Tiger Airways, the CAPA analysis said.
With Ajit Singh, the civil aviation minister making the right noises of addressing the concerns of the Indian aviation sector, it seems
despite the problems of the aviation, airlines seem to give cognizance to the growing Indian aviation market.
Addressing the 5th ASSOCHAM International Conference on Indian Civil Aviation, Singh said, “Among my top priorities will be getting
aviation turbine fuel (ATF) declared as ‘notified product’, to bring transparency in its pricing and reduction of VAT on ATF by the
States.” If this happens, it will be a big relief for all airlines.
India is the only country where around 24 per cent is paid as sales tax on ATF. This is only next to Bangladesh where it is 27 per cent.
Singh also said that innovative solutions like development of low costs airports will be put in place to aid in providing affordable air
connectivity to remote areas of the country, the North Eastern Region and Tier-II and Tier-III cities.
Experts believe that both these moves will be a big boost to the ailing Indian aviation sector as well as to the interest of foreign
airlines. The approximate losses of airlines in the last financial year 2011-12 have been over Rs. 10,000 crore.
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