AirAsia gets licence for domestic airlines in India

Malaysian budget carrier AirAsia has been granted an operating permit by the aviation regulator to operate a domestic airline.

The company is looking to start flying within a couple of months and has said it may add Delhi to its route map. The budget carrier had previously said it would not fly to Delhi and Mumbai due to high airport taxes and charges. While the firm has retained its decision of not flying to Mumbai, it would add Delhi as it becomes important part of any national carrier. Moreover, unlike Mumbai, which has other significant airports close by including Pune, no other nearby city can serve Delhi as a satellite airport.

In February last year, 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 had originally planned to commence operations by October-November 2013 but this got delayed due to pending clearances.

Earlier, domestic companies like IndiGo and an industry body Federation of Indian Airlines, among others, had also raised concerns that foreign direct investment (FDI) in Indian airline sector is permitted in existing carriers and not for setting up new JVs.

Directorate General of Civil Aviation (DGCA) had dismissed the objection.

AirAsia, which already flies to India in the international circuit, will compete with other budget carriers such as IndiGo, SpiceJet and GoAir besides 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 last year.

(Edited by Joby Puthuparampil Johnson)

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