Aviation regulator is expected to give a licence to AirAsia to operate a domestic low-cost airline in India within two weeks or so and has dismissed objections raised by other incumbents, including IndiGo, as per separate media reports.
Earlier, domestic companies like IndiGo and an industry body Federation of Indian Airlines, among others, had raised concerns that foreign direct investment (FDI) in Indian airline sector is permitted into existing carriers and not for setting up new JVs.
Directorate General of Civil Aviation (DGCA) has dismissed the objection.
In February last year, Malaysian budget carrier AirAsia had formed a joint venture with Tata Group and another local business partner Arun Bhatia to operate a domestic low-cost airline. AirAsia owns 49 per cent in the
three-party JV with Tatas owning 30 per cent and remaining 21 per cent is with Telstra Tradeplace (owned by Arun Bhatia).
It will compete with other budget carriers such as IndiGo, SpiceJet and GoAir besides some new players such as Air Pegasus.
The government had opened up the sector to foreign strategic investors, allowing FDI up to 49 per cent in 2012.
Tata Sons, one of the minority partners in AirAsia India, also announced a separate JV with Singapore Airlines to launch a full-service carrier.
In another deal in the sector Abu Dhabi’s Etihad had picked a minority stake in Jet Airways a few months ago.
(Edited by Joby Puthuparampil Johnson)