The Foreign Investment Promotion Board (FIPB) on Wednesday gave an ‘in-principle’ approval to Malaysian airlines, AirAsia bid to start a new airline in a joint venture with the Tata group and Arun Bhatia of Telestra Tradeplace Pvt Ltd.
This would be the first foreign investment proposal to be cleared by the Finance Ministry after the easing of Foreign Direct Investment (FDI) policy in aviation.
AirAsia had announced its plans to enter Indian skies last month and said that it intends to control 49 per cent in the new airline with Tata group company, Tata Sons and Telestra Tradeplace occupying 30 per cent and 21 per cent respectively. The initial investment in the joint venture would be around `80 crore.
A Finance Ministry official said that the clearance had been given on the grounds that 49 per cent FDI is now allowed by a foreign airline.
The plans for a new airline, however, may run into rough weather over whether the amended FDI guidelines in aviation are applicable to new airline companies or only to existing ones. The Department of Industrial Policy and Promotion (DIPP) has been approached by the Aviation Ministry for a clarification, which is likely to be issued soon.
FIPB officials said that the three companies would now have to approach the Directorate General of Civil Aviation (DGCA) for the relevant licences and a scheduled air operator’s permit.
In the meantime, AirAsia CEO Tony Fernandes tweeted his reaction after hearing the ‘exciting’ news.
“The good always win. People and companies with good intentions to create jobs and make life of the average man better will always win,” Fernandes said on the micro-blogging site.
“I have selected the CEO for AirAsia India. A very smart boy from the South, (Chennai). An amazing CV. Will impress all...,” he said.