Air Asia gets closer to flying permit

AirAsia Bhd, the Malaysian airline that plans to launch a low-cost carrier in India sometime this year in partnership with the Tatas, has won the first round against its future rivals. The DGCA on Friday rejected incumbent carriers’ objection to grant an air operator’s permit to AirAsia India, denying their claim that the new airline would disrupt industry “equilibrium”.

Also, the apex court has refused to interfere in the process to issue the licence. BJP leader Subramanian Swamy and the Federation of Indian Airlines lobby group had approached the court, arguing that the current rules on foreign direct investment in the sector don’t allow the setting up of a new airline. ET reported on February 20 that DGCA would decide soon on the various objections against AirAsia India getting a flying permit.

On February 21, the paper reported in detail about two letters sent by the industry group and budget carrier IndiGo against the proposal. The airline lobby group had raised the issue of FDI rules with the DGCA as well. According to it and IndiGo, which wrote separate but similar letters in response to a public notice from the regulator, the rules allow investments by foreign airlines only in existing local carriers and not in a new airline like AirAsia India.

Among India’s airlines, only Indi-Go posts regular profits. Others have been hit by their strategy to pursue debt-funded expansion in the past decade, just before the economic downturn brought down passenger traffic and pushed them into losses.

Read the full report here, Economic Times


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