Aug. 07--The home ministry has granted key security clearance to AirAsia India, the proposed airline of Malaysia's AirAsia Bhd and Tata Sons Ltd, paving the way for it to be given an airline licence by the civil aviation ministry.
The move comes after India cleared a controversial proposal by Abu Dhabi-based Etihad Airways PJSC to buy a 24% stake in Jet Airways (India) Ltd in a $900 million deal, indicating the government's willingness to push through foreign direct investment despite opposition.
"The board members of AirAsia have been cleared by home ministry," said a government official who declined to be named.
A second government official confirmed the government has given the clearance to the joint venture airline, which has former Tata Sons chairman Ratan Tata as its adviser.
An AirAsia spokesman did not offer any comment.
AirAsia holds about 48.95% in the joint venture, Tata Sons 30%, and Arun Bhatia of Telestra Tradeplace Pvt. Ltd 21%.
The airline was granted approval by the Foreign Investment Promotion Board on 6 March. A list of the new airline's board of directors was then sent to the home ministry for approval in late May.
Board members include group chief executive Tony Fernandes; R. Venkatraman, a former executive assistant to Ratan Tata; Bharat Vasani, chief legal counsel of the Tata group, and Telestra's Bhatia.
Security clearance for AirAsia India chief executive officer Mittu Chandilya and chairman S. Ramadorai, a former head of Tata Consultancy Services Ltd, have not yet been sought by the airline. It is not clear if clearance will be needed for them before the airline begins operations.
The joint venture may now be granted a no-objection certificate by the aviation ministry to start an airline, said the first government official quoted above.
After that, AirAsia India can seek a flying licence, also called the Air Operator's Permit, or AOP, from the aviation regulator, the Directorate General of Civil Aviation, or DGCA, and start flights from Chennai, as proposed.
The DGCA procedures can take days and weeks as the airline will have to prepare all the safety manuals, show employment of skilled staff, infrastructure and an engineering set-up to match the needs of a national airline.
Indian carriers are expected to see an infusion of $1.3 billion as a result of foreign airline investment transactions, including the Jet Airways-Etihad deal, the Centre for Aviation (CAPA) said in a July report.
But it added that "major policy decisions, with good intentions, are frequently implemented in an ad hoc manner on the basis of limited consultation, without consideration for the overall structural dynamics of the industry and without sufficient clarity on the detail."
Copyright 2013 - Mint, New Delhi
