AirAsia-Tata JV hits aviation ministry roadblock
Mumbai: A day before the FIPB meeting to look into AirAsia's proposed joint venture to launch a new airline here, the Aviation Ministry is understood to have opposed the plan saying the new FDI rules are meant for existing carriers only.
The Foreign Investment Promotion Board (FIPB) is slated to take up Air Asia's JV proposal with the Tatas and Arun Bhatia. The Ministry is understood to have expressed its reservations in a note to FIPB stating that the new company should have been formed before seeking the government's nod.
The ministry's opposition comes amid reports in a section of the media that AirAsia Group CEO Tony Fernandes was keen to kick off his airline in the country as early as May-June instead of his earlier plans towards the year-end.
It can be noted that a day after the AirAsia announced its 49:30:21 joint venture with the Tatas and Telestra Tradeplace promoted by Delhi-based Arun Bhatia late last month, Aviation Minister Ajit Singh had expressed his displeasure saying he would have been happy had the Tatas chosen to launch its own airline.
Earlier, ministry sources said FDI rules allowing up to 49 percent investment by a foreign airline in domestic carriers are for existing airlines and not for a new company.
Over the weekend, Tata Group patriarch Ratan Tata, who is an avowed aviation buff and whose group is credited with bringing the first airline into the country way back in October 1938, met Singh, for reportedly discussing the JV plan.
In a related development earlier in the day, Fernandes said he had chosen the head for the JV.
"I have selected the CEO for AirAsia India. A very smart boy from the South, Madras (Chennai). An amazing CV. Will impress all...," Fernandes tweeted without naming the person.
Late last month, Air Asia's investment arm AirAsia Investment had moved an application with FIPB seeking approval for the JV in which AirAsia would hold 49 percent stake with the rest being held by Tata Sons (30 percent) and Arun Bhatia's Telstra Tradeplace holding 21 percent.
Fernandes had recently said the new airline would be based in Chennai and in the initial phase would concentrate on destinations in the south where AirAsia already operates and would also focus on providing connectivity to small towns.