New Delhi, March 6: The Foreign Investment Promotion Board (FIPB) has in principle approved Tony Fernandes-led AirAsia’s proposal to start an airline with the Tatas and Arun Bhatia’s Telestra Tradeplace.
The proposal was submitted to the FIPB on February 20 when AirAsia announced the initial agreement.
However, senior civil aviation ministry officials said they would clarify from the department of industrial policy and promotion on whether the proposal conformed to the government’s guidelines on FDI in aviation.
It is unsure whether the current notifications allow a foreign investor to start a greenfield airline or buy into an existing airline.
AirAsia will hold 49 per cent in the airline, Tata Sons will have a 30 per cent stake, while the rest will be with Telestra.
“It’s been cleared,” said Arvind Mayaram, economic affairs secretary. “Now they will have to take the necessary licences from the DGCA. They can start operating once they get the licence.”
Civil aviation minister Ajit Singh also said he did not see the planned joint venture facing any major hurdle except for a few procedural problems. “I do not see any big hurdles. The aviation ministry will check if the procedures of taking a no objection certificate, having two-thirds of directors from India and other norms were followed,” he said.
According to ministry officials, the new company must have at least five aircraft and a paid-up capital of Rs 50 crore if these aircraft are more than 40 tonnes in weight. Also, for each subsequent fleet expansion of four aircraft, the paid up capital must go up by Rs 20 crore.
Ratan Tata today said FIPB’s clearance to the airline venture reflected the government’s “true investor friendly policies” and such actions will reinforce confidence in the country.
“I applaud the government for its transparency and its principled implementation of the stated policy,” he added.
The new airline plans to start flying from this year-end with 3-4 planes and an initial investment of about $50 million by the Malaysian budget carrier. However, overseas flights will only be possible after five years of operations within the country.