AirAsia India likely to miss September launch date - Livemint
New Delhi: AirAsia India, a joint venture between Asia’s largest low-cost airline, Tata Sons Ltd and Arun Bhatia of Telestra Tradeplace Pvt. Ltd, may take longer than earlier planned to start domestic flights in India.
The airline that is 49% owned by Malaysia’s AirAsia Bhd has written to the aviation ministry that it would take about six months from the day it receives final government approval to take to the skies, said two government officials on condition of anonymity.
AirAsia had earlier said it plans to start services by September with two Airbus A320 planes, Mint reported on 16 April. It submitted a detailed business plan to the aviation ministry in late April that envisaged the joint venture expanding to 36 aircraft by the fifth year, using Chennai and Kolkata as its operational hubs, Mint reported on 25 April. AirAsia’s entry into the Indian market, together with the purchase of a stake in Jet Airways (India) Ltd by Etihad Airways PJSC, is expected to instill new competition in an airline industry battling heavy debt and high operational costs. The joint venture is the first under a policy change introduced in September that allowed foreign airlines to invest in Indian ones.
One of the two government officials cited above said the airline has not provided certain details in its application. The ministry had asked whether the chairman, managing director, chief executive officer, chief financial officer and chief operating officer of AirAsia India will be Indians or foreigners. Air Asia founder Tony Fernandes, in his letter to the ministry last fortnight, said all these executives will be Indian nationals. He also wrote that it would take at least six months from the date it receives an “NoC” or no objection certificate from the aviation ministry for the airline to meet safety and security regulations and start operations.
Given that home ministry clearances take at least two months and sometimes three to come through in case foreigners are present on an airline’s board, it could be at least four months before Air Asia India receives its “NoC” from the ministry, said the first official. That would be in September.
After receiving the NoC, the airline would need to acquire an airline license and get approvals for all its safety and security manuals and engineering set-up from the Directorate General of Civil Aviation and Bureau of Civil Aviation Security. “The September launch is unthinkable,” said the first government official. A second government official confirmed the development.
If the airline gets its NoC only by September and requires six months more to start operations, AirAsia India’s launch may spill over into 2014.
Air Asia’s Fernandes did not offer any comments for this story.
The aviation ministry had also asked AirAsia India to “indicate” the names of the senior management personnel it plans to hire. Fernandes didn’t mention the names of the senior management of its Indian unit in his letter .
Air Asia has on 15 May announced that Mittu Chandilya would be its first India CEO. It has not announced the rest of the management line-up.
“The start-up process has been smooth sailing so far,” said Fernandes in a statement from Sepang, Malaysia, on AirAsia’s financial results. “We have submitted our AOC (air operator’s certificate) application and are currently waiting for the approval before we start operating in Chennai.”
He praised the entrepreneurial skills and experience of Chandilya and said he was confident that “Mittu will be one of the key people to revolutionize the air travel industry in India”.
Tata Sons has a 30% stake in Air Asia India, with Arun Bhatia of Telestra Tradeplace owning 21%.