FIPB Cleared Investment Proposal of AirAsia to Enter India’s Aviation Sector

The Foreign Investment Promotion Board (FIPB) on 6 March 2013 cleared the investment proposal of AirAsia, the Malaysian budget carrier to launch the new airline along with Tata Group and Arun Bhatia's Telestra Tradeplace.
 
Crucial points to note:

• AirAsia has plans to own 49 percent in newly formed airline through its investment company AirAsia Investment Ltd (AAIL). Rest of the stake would be held by two Indian firms.
• After the deal, AirAsia will become the first foreign carrier that will enter the aviation sector of India after the Government altered rules in September 2012 to allow foreign carriers to have 49 percent stake in the domestic airlines.
• Tata Sons will have 30 percent stake in joint venture without any operating role in airline. Telestra Tradeplace will have 21 percent stake in the venture.
• AirAsia would set up a joint venture in the ratio 49:30:21 with Tata Sons and Telestra Tradeplace in order to launch the airline.
• AirAsia, Tata Sons and Telestra Tradeplace would invest 9 million US dollars in order to establish this venture. Initial investment by AirAsia-led joint venture would amount to 80 crore Rupees.
• After approval of FIPB, the newly established JV Company would write application to aviation regulator Directorate General of Civil Aviation (DGCA) for the purpose of getting Air Operators Permit.

AirAsia plans to start the operations from June 2013. 3-4 planes would have headquarters in Chennai. The focus would be to provide connectivity to Tier-II and Tier-III cities. Proposed airline has no plans to fly on the international routes. The airlines that have completed 5 years of domestic operations and also have a minimum fleet of 5 aircrafts are allowed to operate on the international routes, as per the present rules.