AirAsia has received a formal letter from the Indian Government indicating that its proposal for setting up a domestic airline has been approved.

In a statement the airline said that the formal approval was granted on April 4. “This approval will enable AirAsia (India) Private Ltd to apply with the Directorate General of Civil Aviation for the aviation licence to operate as an Indian airline,” the statement adds.

Earlier, the Finance Ministry had issued a press release saying that AirAsia proposal was one of the several foreign direct investment proposals which had been given the nod by the Government. The new airline, which is expected to become operational later this year, is a three-way joint venture between Tata Sons, Arun Bhatia of Telestra Tradeplace Pvt Ltd and AirAsia.

The joint venture plans to operate from Chennai focused on providing domestic Tier II and Tier III city connectivity to travellers.

AirAsia will initially invest about $30-55 million in the proposed venture and would start operations with three to four Airbus A-320 aircraft, AirAsia CEO Tony Fernandes had said recently.

AirAsia, which is Asia’s largest low-cost carrier with 118 aircraft, operates 63 weekly services from Kuala Lumpur and Bangkok to Chennai, Tiruchi, Kochi, Kolkata and Bangalore. According to analysts, the draw for AirAsia is the huge Indian market. Another foreign airline, Etihad, is looking to tie up with Jet Airways.

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