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In a move that could make it more difficult for foreign entities to take over the management of a domestic airline in India, the Directorate-General of Civil Aviation (DGCA) has stipulated that an Indian carrier cannot enter into an agreement that gives the foreign airline, foreign investing institution or others on their behalf the right to control the management of the domestic operator.
Analysts feel that the revision to the Civil Aviation Requirement (CAR) could affect the fortunes of Etihad's buy-out of Jet Airways as also the two new start-up airlines, AirAsia India and Tata-Singapore Airlines.
All three are at various stages of getting permission from the Government.
The CAR, laid down by the DGCA, stipulates the rules that an airline has to follow to be allowed to operate in the country.
Aviation industry watchers feel that the worst affected is likely to be AirAsia India, the three-way joint venture between AirAsia, Tata Sons and the Bhatias.
“In the case of AirAsia India, the only one visible is Tony Fernandes, the global promoter of Air Asia, while the other two partners seem to be sleeping partners,” explained an industry expert justifying why the AirAsia India proposal is likely to be the most affected.
Terming the development as “significant”, a senior airline official felt that the decision will limit the freedom of all three foreign airlines, which have a stake in domestic airlines to station their own choice of foreigners here.
The issue first came to the fore in April 2013 when Etihad acquired a 24 per cent stake in Jet Airways for over ₹2,000 crore.
The Government and the regulatory authorities allowed the deal to go through only after they were satisfied that effective control would remain in India as Jet Airways is an airline registered here.
The revised CAR also states that if the position of the Chief Executive Officer (CEO), Chief Financial and/or Chief Operating Officer, is held by foreign nationals, then they will require the security clearance from the Home Ministry.
It further adds that a Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline, which furnishes wrong information shall be liable for suspension/cancellation of operating permit.
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