On the alleged violation charges of foreign direct investment (FDI) rules, AirAsia Bhd on Friday asserted that effective control of its joint venture AirAsia India is with Indian parties and said “vested interests” were trying to prevent the local no-frills airline from offering competitive service and fares.
The clarification came amid concerns expressed in various quarters about effective control at the low-cost airline AirAsia India—jointly owned by Malaysia-based AirAsia and Tata Sons Ltd.
AirAsia Group chief executive Tony Fernandes said it is time for India to end patronage and put people first and emphasised that the Prime Minister Narendra Modi-led government has promised fairness and transparency.
According to AirAsia, a provision (Clause 5.30) in the brand licence AirAsia India and AirAsia explicitly states that substantial ownership and effective control of the licensee remains at all times with Indian residents.
“We are shocked and surprised by the unprecedented opposition we continue to face in the Indian market from vested interests that are determined to find any reason or argument to block us in our endeavour to offer Indian consumer the most competitive service and fares,” AirAsia said in a statement.
It reiterated that AirAsia India’s majority ownership and effective control are with Indian parties as per regulations. “All the important decisions concerning the day-to-day operations of the airline are taken by the management team of the airline under the overall supervision, control, and direction of the board of directors (which include a majority of Indian nationals),” the statement said.
Last month, Tata Sons said it would hike its stake in AirAsia India to 49 per cent by buying additional shares from Arun Bhatia’s Telstra Tradeplace Private Limited which would be exiting the airline. Telestra Tradeplace had around 10 per cent stake.
While Tata Sons would buy 7.94 per cent shareholding, the remaining stake would be purchased by the carrier’s two directors; S. Ramadorai and R. Venkataramanan, in their individual capacities.
Post the deal, Tata Sons and Malaysia’s AirAsia would have 49 per cent stake each in the no-frills airline.
BW Reporters
Haider Ali Khan is an alumnus of IIMC. He holds a degree in English Journalism from the prestigious campus. His passion includes Aviation, Technology, Politics and Sports.
