Aug. 15--NEW DELHI -- AirAsia India will not receive its airline licence for some more time, potentially delaying its launch, because the proposed venture of Malaysia's AirAsia Bhd, Telestra, and Tata Sons Ltd has just applied for security clearance for chairman S. Ramadorai.
The airline applied for security clearance for other members on its board in the second half of April. Ramadorai, the former CEO of Tata Consultancy Services Ltd, was appointed chairman of the airline later, on 17 June, but AirAsia India didn't seek security clearance for him immediately.
AirAsia India was originally expected to start flying in September, as reported by Mint on 16 April.
The administrative glitch comes in the wake of a potential legal hurdle. The Bharatiya Janata Party's Subramanian Swamy filed a petition in July in the Supreme Court seeking quashing of clearance granted to AirAsia India on the grounds that it violated the country's foreign investment policy. The case will come up for hearing on Friday.
AirAsia, which applied for an airline licence from the aviation ministry in April, has just received the home ministry's clearance for Tony Fernandes (the Malaysian company's founder chairman); R. Venkatraman, a former executive assistant to Ratan Tata; Bharat Vasani, chief legal counsel of the Tata group, and Telestra's Arun Bhatia, as Mint reported on 6 August.
The home ministry is required to approve the appointment of Indian and foreign nationals on the board of the country's carriers. The airline has now sought to obtain clearance for Ramadorai, said two government officials who asked not to be identified.
The airline's licence application cannot be processed until the home ministry gives its approval.
"I don't think they will be able to launch before March-April," said one of the officials, referring to several procedures that need to be followed before an airline gets permission to fly from aviation regulator Directorate General of Civil Aviation (DGCA).
DGCA could take weeks, even months, to vet the airline's safety manuals, check whether it employs adequately trained staff, and also ensure that the infrastructure and engineering support meets the requirements of a national airline, he added.
An AirAsia spokesperson declined tocomment.
AirAsia holds about 48.95% in the joint venture, Tata Sons 30%, and Arun Bhatia of Telestra Tradeplace Pvt. Ltd 21%.
On Friday, the Supreme Court is expected to hear the 60-page plea filed by Swamy terming the approval given to AirAsia Bhd's investment as illegal. Swamy's argument is that the policy was meant only to allow investment in existing airlines, not start-ups. Swamy also said in the plea that control of the new airline will be with AirAsia rather than the Indian partners Tata and Bhatia.
Swamy said he has asked for a stay in the ongoing process of AirAsia India getting a no-objection certificate.
IndiGo, GoAir and Kingfisher Airlines had also considered a move, under the aegis of the Federation of Indian Airlines, to write to the government and oppose the policy of foreign airlines investing in start-ups but gave up the idea after no consensus emerged among Indian airlines, Mint reported on 7 August. Jet Airways, Air India and SpiceJet had not supported the move.
The airline will increase competition, said an analyst.
"AirAsia is required. More players are required to break the monopolies that are being created in the Indian airline market," said Shakti Lumba, an independent aviation analyst formerly with Air India and IndiGo.
Clearance for Ramadorai should have been sought sooner, he said.
"I think this is a minor procedural delay but it doesn't speak very highly of the people responsible for the project. They should have applied for a security clearance when they appointed him. Had it been so, the security clearance would have come by now," he said.
Copyright 2013 - Mint, New Delhi
