AirAsia, the Malaysian budget carrier that has proposed to set up a new budget airline in India in partnership with Tata Sons and Telestra Tradeplace, will face no major hurdle barring some procedural problems, Civil Aviation Minister Ajit Singh said on Wednesday.
“I don’t see any big hurdles whether they (AirAsia) with Tata and Arun Bhatia form joint venture before or after. The aviation ministry will check procedures of acquiring no objection certificate, two-third of Indian directors and other prescribed steps were followed or not,” the minister said speaking to the Press on the side lines of an industry seminar organised by the Indo American Chambers of Commerce here.
However, he said AirAsia’s planned joint venture could face some procedural problems that have to be cleared by the Foreign Investment Promotion Board (FIPB).
AirAsia with 49 per cent stake, Tata Sons (30 per cent) and Arun Bhatia of Telstra Tradeplace (21 per cent), have proposed to set up a low-cost carrier in India, which is expected to take wings later this calendar year.
Singh said the decision to allow FDI in Indian carriers will be a game changer for the Indian civil aviation sector in the long run. The sector was opened last September when government allowed foreign carriers to pick up upto 49 percent stake in Indian domestic carriers.
With high growth expected in passenger traffic India, Singh said India will need investments to the tune of `67,000 crore in the next five years of which 75 per cent is expected to come from private participation.
“This massive growth in air traffic in the years to come would require huge investment for construction of new airports, expansion and modernisation of existing airports, improvement in connecting infrastructures like road, metro and sea link and also better flight management,” he said.
The government has approved 15 more airports under the Greenfield Airports Policy with majority of them being developed under the public private partnership mode.
Regarding the recent tax sops extended to maintenance, repair and overhaul (MRO) facilities, Singh said India has the potential to become (MRO) hub due to growing aircraft fleet, location advantage and availability of talent.