Pvt airlines ask PM not to give AirAsia licence

The Federation of Indian Airlines (FIA), a representative body of private airlines, has written to Prime Minister Manmohan Singh, asking him not to grant an operating permit to AirAsia, which seeks to start India operations. The federation has asked Singh to intervene in the issue so that other airlines aren’t hurt by the move, adding the decision on the new airline is on the basis of an “incorrect interpretation of the FDI (foreign direct investment) policy”.

AirAsia India is a joint venture between Malaysian low-cost airline AirAsia, the Tata group and Telestra Tradeplace Pvt Ltd. The airline has secured a no-objection certificate from the civil aviation ministry, but is yet to receive an operating permit from the Directorate General of Civil Aviation (DGCA).

The FIA has moved the Delhi high court against the Foreign Investment Promotion Board (FIPB)’s approval to AirAsia. The court has issued notices to FIPB and AirAsia, seeking their responses by March 12. Earlier, the federation had objected to the grant of a permit, while replying to the DGCA’s public notice seeking comment on the issue of licence to the Malaysian low-cost airline.

“None of the objections submitted by the FIA to the DGCA have been addressed in these (DGCA) findings, nor was a hearing given to FIA,” said the letter, written by Ujjwal Dey, the FIA’s associate director, to Singh. It added the FIPB hadn’t examined the issue of whether the substantial ownership and effective control was with Indian nationals (one of the conditions required for the grant of a permit), adding this was brought up in a petition before the high court. Yet, a DGCA committee set up to scrutinise the comments on the licence to AirAsia, had disposed of the objections against AirAsia. It was apparent the findings and conclusions of the committee were flawed, the letter said.

The FIA’s primary argument is FDI norms in the aviation sector were relaxed to enable investment in functioning airlines, not to draw investment in new ones. Private airlines, including GoAir, IndiGo, Jet Airways and SpiceJet, fear the launch of AirAsia India will impact their business.