AirAsia’s Expansion Plans In India Hit By Probe Against Its Boss

Allegations of possible bribery to change local airline policy in India are being investigated by security agencies in India against Tony Fernandes, the chief of AirAsia Group.

According to media reports in India quoting an official from the Central Bureau of Investigation (CBI), it is investigating allegations against Fernandes – named in the FIR, as well as other executives from AirAsia and the Indian unit of the company.

There were no comments from the CBI or Fernandes or the spokesperson from AirAsia in India.

This development is a setback for the plans of expansion by AirAsia in India where it has been planning and enhancement in the number of its domestic flights as well as commencing of international flights from the country in January next year. India had been at the centre of Fernandes’ plan of being a dominant force in this regional Asian aviation industry and his dream of capturing a large chuck of the market that is dominated by Gulf-based carriers and the Indian national carrier Air India.

Indian aviation policies, that included obtaining a flying permit and approvals to fly internationally, were among the policies that Fernandes and other officials wanted to change through bribery through a middleman, are the allegations that the CBI is probing.

The decade old restrictive practice of allowing international licenses to airlines that had five years of domestic operations and possessed a minimum of 20 aircraft in their fleet was repealed in India in 2016. According to the new regulations, the government now allows foreign airlines to start international flights if the airlines made use of 20 planes or about 20 percent of their total capacity, whichever is higher, on local domestic routes. This change in aviation policy allowed the local affiliates of AirAsia and Singapore Airlines Ltd. to plan and commence overseas flights sooner than otherwise would have bene possible under the older rules.

A tender to lease as many as 40 Airbus SE A320 jets has been floated by the Indian unit of AirAsia – AirAsia India where the Tata Sons Ltd. and local directors have a controlling share of 51 percent. The airline has pledged to nullify all of its annual losses this year.

In his effort to take advantage of very fast growth in traffic in the Airline industry, Fernandes has created affiliate companies during the last few years in multiple countries in Asia which include Indonesia, Thailand, India, Japan and Vietnam. The company has undertaken a program for selling of a plane leasing unit so that it can raise more cash and has recently placed orders for hundreds of aircrafts from Airbus SE worth billions of dollars so that it can meet its expansion obligations.

(Adapted from NDTV.com)

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Categories: Economy & Finance, Regulations & Legal, Sustainability, Uncategorized

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