AirAsia,Tata Sons airline closer to launch in India after FIPB gives nod

Significantly,a civil aviation official at the meeting raised a query about the lack of clarity on FDI norms in the proposal. The query was on the language of the Cabinet-approved FDI notification that a foreign airline can buy stake in an existing firm with licence. “The civil aviation ministry representative raised the query on clarity to the representative of the Department of Industrial Policy and Promotion (DIPP),which clarified that the norms are for both new and existing airlines. The orders clarifying the position will be issued soon,” said an official.

Neither the ministry of civil aviation nor the DIPP and Department of Economic Affairs had given their written comments on the AirAsia proposal for the FIPB meeting.

AirAsia CEO Tony Fernandes thanked every one after the decision. “Exciting. Thank you all,” he said in a tweet.

AirAsia will hold a 49 per cent share in the venture with the Tata Group holding another 30 per cent. The rest is from Delhi-based Amit Bhatia. Analysts also welcomed the clearance saying it will give a boost to the aviation market. “An entry of a new player will enhance competition that will bring in greater efficiency and innovation. The resultant pressure on yields may also lead to consolidation in the next 12-24 months,” said Amber Dubey,partner and head-aviation at KPMG.

The proposal by AirAsia,however,still has some distance to go before take-off. The airline company will now have to approach the ministry of civil aviation for a no-objection certificate (NOC).

“To get the NOC,the company,as per present rules,must possess at least 5 aircraft and have a paid-up capital of Rs 50 crore if these aircraft are more than 40 tonnes in weight. Also,for each subsequent fleet expansion of 4 aircraft,the paid up capital must go up by Rs 20 crore,” said an official. Once the NOC is in place,the firm will have to apply to the Directorate General of Civil Aviation for a flying licence.

Last month,AirAsia Investment had moved an application with the FIPB seeking approval for the joint venture company.

Nod will reinforce confidence: Tata

After the FIPB gave its approval to the AirAsia-Tata airline proposal,Ratan Tata,chairman emeritus,Tata Sons,tweeted,“FIPB approval of the airline project… reflects the true investor friendly policies of the government. This and other similar actions will,without doubt,reinforce investor confidence in India. I applaud the government for its transparency and its principled implementation of the stated policy.” The comment comes at a time,when the government is trying its best to get foreign firms and funds into the country. ENS