AirAsia-Tata JV clears first hurdle

The initial investment will be Rs 80 cr, JV will now have to approach DGCA for operator's permit

The government on Tuesday said it had cleared Malaysian budget carrier AirAsia’s proposal to start a passenger airline in India in partnership with the Tata Group, with an investment of Rs 81 crore.      
The proposal was cleared by the Foreign Investment Promotion Board (FIPB), the finance ministry said.     

AirAsia recently said it would set up a 49:30:21 joint venture with the Tata Sons and Telestra Tradeplace of Indian investor Arun Bhatia to launch an Indian airline.

Asked whether AirAsia and the Tatas had approached his ministry, Civil Aviation Minister Ajit Singh on Tuesday said: "No, they have not filed any application."     

He added there were "some concerns ... Some procedural issues" with regard to the proposed airline.     

"We will look into it quickly. But, all that would depend on how fast they provide us the information regarding safety, aircraft, pilots and airworthiness of the aircraft. Any clearance will depend on how fast they give all this information that would be required by the directorate general of civil aviation (DGCA) (to grant them a flying permit)," the minister said.     

The FIPB clearance was granted in line with the policy which allowed up to 49 per cent foreign direct investment (FDI) by a foreign carrier in an Indian airline. AirAsia is the first foreign airline to set up a joint venture in the Indian passenger airline segment after liberalisation of the FDI policy in the sector last September.

Following the FIPB clearance, the AirAsia joint venture would now have to approach the DGCA for further clearances and a scheduled air operator's permit.      

AirAsia Group CEO Tony Fernandes recently said the new airline would be based in Chennai, and in the initial phase would concentrate on destinations in south India, and also on providing connectivity to small towns.

Shares in Jet Airways India fell 3.6 per cent and SpiceJet shares dropped three per cent in Tuesday’s trade, on heightened concerns about increased competition.