DGCA clears decks for Tata-AirAsia venture to take off

AirAsiaThe government on Friday reportedly gave the final clearance to Tata-AirAsia joint venture for a low-cost airline, after the Directorate General of Civil Aviation (DGCA) disposed of objections raised against the proposed new carrier, filed by other Indian airlines and some politicians.

"AirAsia India is yet to complete all formalities, so we did not issue the schedule air operator permit (AOP) along with disposing the objections. Their application for consideration of issuing the AOP has been held valid and the same will be issued as soon as they meet all procedural requirements," a DGCA official said.

The head of the DGCA Prabhat Kumar, disposed of the objections - which were essentially that foreign direct investment in Indian aviation was meant for investment in existing airlines and not for creating startups, as well as the issue of "effective control" with Indians. The issue was taken to court, but the petitioners did not get a verdict against FDI for start-ups

"The government has decided that FDI in airlines is also for start-ups. We had no jurisdiction to take a call on it again," Kumar said.

Among those who had objected were the federation of Indian airlines, IndiGo and politician Subramanian Swamy.

Now the DGCA has removed the last hurdle in Tata-AirAsia's path and it is up to the new airline to complete all formalities to start flying.

Almost exactly a year ago, the Tatas and Singapore-based AirAsia had announced their plan for forming the new airline and received approval of the Foreign Investment Promotion Board (FIPB) on 5 March (See: AirAsia gets FIPB nod for airline JV with Tatas).

It was the first case of FDI by foreign airlines (allowed in September 2012) being used to form a start-up. Before that Etihad Airways had announced an investment in India's Jet Airways.