Even as Tony Fernandes, promoter of Malaysian low-cost airline AirAsia, tweeted on Tuesday that he had selected a “very smart boy from south Madras (Chennai)” as AirAsia’s Chief Executive Officer for its airline, a question mark hangs over his proposal to set up a new domestic airline with the Tata group. It comes up before the Foreign Investment Promotion Board (FIPB) for clearance tomorrow.
A cross-section of Ministries represented on the FIPB feels that the Tatas and Telestra Tradeplace Ltd., partners in the proposed airline, should have first formed a company, in which AirAsia had invested, before seeking approval. They believe that such a proposal would find greater acceptance with the Government.
Secretaries of the Ministries of Finance, External Affairs and Commerce are among the permanent representatives on the FIPB.
Secretaries of Ministries related to the issue being considered (in this case, the Civil Aviation Ministry), are also invited to the meeting.
Some in the Government believe that the decision to allow foreign airlines to acquire a stake in domestic carriers was made to provide the latter access to funds, which were difficult to come by from banks.
Meanwhile, the Directorate-General of Civil Aviation (DGCA) has formally notified the rules under which a foreign airline can acquire a stake in a domestic airline.
The notification states a “foreign airline” is one that has been issued an Air Operator Certificate by a state other than India to carry out specified commercial air transport operations. The notification makes it clear that only such scheduled and non-scheduled airlines “which are companies registered under the Companies Act, 1956” can receive FDI from foreign airlines.