Tony Fernandes
Malaysia-based aviation entrepreneur Tony Fernandes might be in for a rude shock on Tuesday when the India's premier investigation agency CBI (Central Bureau of Investigation) allegedly filed cases against him and other officials for bribing government officials to amend the once-controversial 5/20 rule that mandated airlines to have five years of experience and a minimum of 20 aircraft-fleet to fly on international routes.
The CBI has said that the payments of about Rs 12.28 crore were remitted to India to lobby with civil servants during the UPA rule. AirAsia India, which is a joint venture between Tata Sons and AirAsia Berhad, was started in 2013 as a low-cost carrier, and currently flies 18 Airbus A320s. AirAsia India marked the re-entry of Tata Group in the aviation sector after a long break.
Two year ago, as part of the new aviation policy, the civil aviation ministry modified the rule to 0/20 that benefitted start-up airlines like AirAsia India and Vistara, which were were no longer required to wait for five years to start international operations. Though having 20 aircraft in the fleet still takes time because ordering new aircraft has a significant time lag. The 5/20 rule, that came into effect in 2004, benefitted legacy carriers that fought hard against the removal of this rule.
The investigating agency alleged the AirAsia Group has also violated FIPB (Foreign Investment Promotion Board) and FDI (Foreign Direct Investment) norms by giving management control to a foreign entity, and making AirAsia India a de-facto subsidiary of AirAsia Group in the process. This particular allegation has been floating around in the market ever since the airline's co-founder Arun Bhatia broke its ties with the airline over the concerns of the disproportionate control of parent company in the functioning of the carrier, which he said was in contravention of the Indian laws. Later, Bhatia sold his stake and said that he would take up the matter legally.
The airline has been in news for wrong reasons for long. Two years ago, a Deloitte Touche investigation into Air-Asia India unearthed irregularities in the financial transactions of about Rs 22 crore involving its former CEO Mittu Chandilya.
AirAsia India struggles to make a mark in the Indian aviation space. Its market share stood at 5 per cent in April. Recently, the airline's CEO and MD Amar Abrol resigned from his position, and is reportedly moving back to the group headquarters in Malaysia to work on other projects.
Meanwhile, AirAsia India has refuted any wrong doing and is co-operating with all regulators and agencies to present the correct facts. "In November 2016, AirAsia India had initiated criminal charges against its ex-CEO and had also commenced civil proceedings in Bangalore for such irregularities. We hope to bring early resolution to all such issues," Shuva Mandal, Director at AirAsia India said in an official statement.