AirAsia under scanner in international license case: All you need to know

The CBI has accused the airline of allegedly lobbying with government servants for clearances, the removal of the existing 5/20 rule, and changes in regulatory policies

AirAsia India Director R Ramachandran Venkataramanan has been summoned by the Central Bureau of Investigation (CBI) for questioning in connection with alleged corruption to get international operations clearances for the airline from the about four years ago. 

The central probe agency had recently questioned AirAsia Chief Financial Officer Deepak Mahendra, sources have told news agencies. 

The promoters and board of directors of AirAsia India are accused of allegedly indulging in a criminal conspiracy with unidentified government officials through lobbyists to speed up the international operations approval process for the airline and change in aviation policies to suit the company.   

Apart from Anthony Francis "Tony" Fernandes, the FIR names Group CEO Air Asia Malaysia, the company Air Asia, Travel Food owner Sunil Kapoor, Venkataramanan, aviation consultant Deepak Talwar, Director of Singapore-based SNR Trading Rejendra Dubey, AirAsia Group Deputy CEO T Kanagalingam, alias Bo Lingam, and "unknown public servants" of the Civil Aviation Ministry and the then Foreign Investment Promotion Board.   

Here is what you need to know:

1) The CBI had registered a case against AirAsia Group CEO Tony Fernandes and others at the end of May this year over alleged violation of norms for getting international flying licenses.  

2) The case relates to two alleged violations. First, the alleged violation of norms by directors of AirAsia for the relaxation of the "5/20 rule" to get licenses for international operations. Second, the violation of Foreign Investment Promotion Board (FIPB) rules. 

3) What is the "5/20 rule"? Under this rule, a company needs five years of domestic flying experience and 20 aircraft to get a licence to fly internationally. The CBI has accused Fernandes of allegedly lobbying with government servants for clearances, the removal of the existing 5/20 rule of aviation, and changes in regulatory policies.  

4) The CBI FIR alleges that in December 2014, Sunil Kapoor, who runs an in-flight catering company, along with AirAsia Group Deputy CEO T Kanagalingam, alias Bo Lingam, handed over a packet containing Rs 5 million (Rs 50 lakhs) to facilitate the removal of the 5/20 rule. 

5) The FIR also alleges that Fernandes wanted the airline venture to be able to fly internationally from Day One. AirAsia's India partner Tata Sons Ltd, through their nominee Venkataramanan, would lobby to get all government approvals, including clearance from the now-defunct FIPB and the amendment/removal of the existing 5/20 rules.  

6) The FIR further alleges that a secret Cabinet note was sent in February 2014 to the Cabinet to amend/remove the 5/20 rule. The proposal, however, could not be approved since elections had already been announced.  

7) It is also alleged by the CBI that FIPB and FDI norms were violated by the AirAsia Group by giving effective management control to a foreign entity by making the private airline AirAsia India Ltd a de-facto subsidiary indirectly rather than a joint venture.   

8) The CBI has told news agencies that it had received information that AirAsia India was indirectly controlled and operated by the AirAsia Group and particularly AirAsia Berhad, violating the norms of FIPB. This structure was directly formalised through a "brand licence agreement" signed by AirAsia represented by Fernandes and AirAsia Berhad represented by AirAsia Group Deputy CEO T Kanagalingam, alias Bo Lingam, on April 17, 2013, which indirectly made AirAsia India a de facto subsidiary rather than a joint venture. According to the then FDI policy, foreign airlines were allowed to own up to 49 per cent of shares in domestic airlines but effective management control was to remain with the Indian partner.

   

9) AirAsia India has refuted any "wrongdoing" after the CBI registered a case against Fernandes. According to the airline, it is co-operating with all regulators and agencies to present the correct facts. "In November 2016 AAIL had initiated criminal charges against its ex-CEO and had also commenced civil proceedings in Bangalore for such irregularities," Air Asia India's Director Shuva Mandal was quoted as saying in a statement. "We hope to bring early resolution to all such issues."  

10) Former civil aviation minister Praful Patel has rebuffed reports of the UPA government's involvement in the Air Asia clearance deal and said that the scam didn't happen during his tenure. Patel told news agencies, "I was not the minister when the Air Asia deal happened, so I have really no idea about this."