AirAsia Case Deferred; Airline May Get License By Next Week

May 02--NEW DELHI -- The Delhi high court on Thursday set up a new bench to hear Bharatiya Janata Party (BJP) leader Subramanian Swamy's plea seeking to stop the government from issuing airline licence to AirAsia India Ltd, which is likely to get the permit as early as next week.

AirAsia has completed nearly all the technical formalities and was to be issued a licence any day by the Directorate General of Civil Aviation (DGCA), Mint reported on 24 April.

DGCA, which has so far been cautious and has not granted a permit till 1 May when the matter was to be heard by the court, will now decide on awarding the licence, said a top government official who declined to be named.

"There is no written order or undertaking from the government of India to the court not to grant AirAsia a licence. There is no stay order from the court in writing or verbally not to issue a licence in its due course," the official said. "If all goes well, India will have a new airline next week."

AirAsia did its first demonstration flight of its new Airbus A320 aircraft on Thursday for DGCA. This is the final step before a licence is awarded. A few more such test flights will need to be conducted in the next few days, the government official said.

"It is understood that any order of DGCA is subject to being quashed by the high court or the Supreme Court. That's the rule of law. So let the law take its course. Why are people trying to nix a project in its bud? We need more airlines and planes. Corporate lobbying can't be allowed to stall that," the government official said.

The new high court bench will include chief justice G. Rohini and will hear Swamy's petition that also has a bearing on the launch of Tata-SIA Airlines Ltd, a joint venture between Tata Sons Ltd and Singapore Airlines Ltd. In a brief hearing, the bench was informed that pleadings in the matters have been completed and now they can be listed for final hearing.

In an interview, Swamy said DGCA "cannot issue the licence" till the next hearing because it has now been made a party to the case and it has to first reply to the courts. An airline needs to have substantial control in Indian hands by way of ownership, and Swamy claims AirAsia is effectively controlled by foreigners.

AirAsia India is 49% owned by AirAsia Bhd, 30% by Tata Sons and 21% by Arun Bhatia's Telestra Tradeplace Pvt. Ltd. Tata-SIA Airlines is owned 51% by Tata Sons and 49% by Singapore Airlines.

"They won't have the nerve to proceed," Swamy said. "DGCA will have to answer all the fundamental questions."

AirAsia chief executive Mittu Chandilya declined to comment.

Besides Swamy and the Federation of Indian Airlines (FIA), a lobby group led by IndiGo, Jet Airways (India) Ltd, SpiceJet Ltd and GoAir, has also filed a similar case. FIA also declined to comment on the lawsuit.

Swamy had filed the case against AirAsia last year and dragged Tata-SIA into the case after aviation minister Ajit Singh on 2 April approved the joint venture's application.

Swamy argued that a September 2012 decision by the aviation ministry allowed foreign direct investment (FDI) in only existing Indian airlines but that government agencies had wrongly interpreted it to allow FDI in start-ups.

Copyright 2014 - Mint, New Delhi

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