Ministry in the dark about AirAsia’s control over Indian arm

13 Oct 2016


The civil aviation ministry has said that it granted an airline licence to AirAsia India while it was not aware of the details of the relationship the company has with its parent, Malaysia-based AirAsia Bhd.

According to a report in Mint, the ministry was not aware that a brand licence agreement between AirAsia India and AirAsia Bhd effectively grants control of the former to the latter in contravention of Indian law.

This control is currently the matter of a case in the Delhi High Court filed by Bharatiya Janata Party parliamentarian Subramanian Swamy.

The ministry is likely to file a detailed affidavit in the high court on 11 November admitting its lack of knowledge about the details of the deal.

Indian law allows a foreign airline to own up to 49 per cent of an Indian one, but the Indian entity has to be controlled and run by Indian partners. AirAsia Malaysia, through AirAsia Investment Ltd, owns 49 per cent in AirAsia India. The Tata group owns 49 per cent, and two directors in the firm - S Ramadorai and R Venkataramanan - hold the remaing 2 per cent.

In April, the Directorate General of Civil Aviation (DGCA) said it was not aware of any brand licence agreement between AirAsia India and its Malaysian parent.

A few weeks ago, according to two government officials who asked not to be named, DGCA asked the aviation ministry, if it had a copy of the brand licence agreement, says the Mint report.

DGCA grants airline licences only after the ministry issues a no-objection certificate.

The aviation ministry has admitted, Mint learns, that it does not have a copy of the agreement.

The agreement was signed on 17 April 2013 by Tharumalingam Kanagalingam or 'Bo Lingan'. AirAsia Bhd's group chief operating officer, for AirAsia Bhd and AirAsia founder Anthony or Tony Fernandes acting on behalf of AirAsia India Pvt Ltd.

AirAsia India got its operating licence from DGCA in 2014.

The civil aviation ministry, said one of the government officials quoted above, would have liked to issue a show cause notice to the airline but has decided to let the court decide on the matter.

Civil aviation secretary Rajiv Nayan Choubey said as much in an interview with Mint last month. ''The court will tell us what to do,'' he said.

AirAsia India's current chief executive Amar Abrol did not respond to an email seeking comments on the subject.

AirAsia India, which started operations in June 2014, has eight Airbus A320 planes, flies to 11 cities, and has a domestic market share of 2.2 per cent.

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