Airline lobby group Federation of Indian Airlines (FIA) on Thursday wrote to Prime Minister Manmohan Singh requesting him to deny an air operating certificate to Air Asia India saying the entry of the upcoming carrier in the Indian market will result in "unfair" competition.
“We submit it (FDI in aviation sector) did not contemplate the introduction of new international airlines with new Indian joint venture partners. By allowing new entrants to invest with new joint venture partners it would defeat the very purpose of the policy itself,” said the letter which was written by FIA's Associate Director Ujjwal Dey.
“lnternational Airlines would rather use the opportunity of entering India, which they were hitherto not permitted to do, on their own with a new joint venture partner and thereby avoid having to invest in the existing loss making airline industry," it said.
“We understand that currently the DGCA (Directorate General of Civil Aviation) is in the process of imminently issuing an operating permit to Air Asia (India). It is our submission before you that before any such approval is given or the permit issued the government should examine and consider the interpretation of the FDI policy, which we humbly submit is being incorrectly expanded and wrongfully applied,” the letter added.
A copy of the letter has been reviewed by FE.
Recently, a three member Committee under the chairmanship of DGCA's Joint Director General AK Sharan, which was constituted to examine the representations from parties which objected to DGCA granting Air Operator's Certificate (AOC) to Air Asia India, gave a green signal for issuance of flying permit to the upcoming carrier.
“The Committee in its report have not found any reason to keep on hold the processing of application of M/s. Air Asia (India) Pvt. Ltd., for issuance of Air Operator Permit (AOP),” the DGCA committee report, which was put up on agency's website, said.
The letter submitted by the FIA to PMO criticised the DGCA decision, saying, “The FIA had submitted its objections and asked for a personal hearing. None of the objections submitted by the FIA to the DGCA have been addressed in these findings nor was a hearing given to the FIA."
Last week, the FIA had challenged the approval obtained by AirAsia from Foreign Investment Promotion Board's (FIPB) to begin its operations in India, at the Delhi High Court. The court has asked both FIPB and the airline to respond by March 12. .
The upcoming airline Air Asia India had on April 2013 obtained approval from the Foreign Investment Promotion Board, which cleared the $30-million deal to launch Air Asia India. The Civil Aviation Ministry gave a no-objection certificate (NOC) to the airline during September last year. The airline was also granted in-principle approval to import 10 Airbus A-320-200 aircraft in December last year.
Officials of Air Asia India had earlier told FE that the airline was looking for a launch in India in the March-May period .
Air Asia India is a joint venture between Air Asia Bhd, which holds 49% stake, Tata Sons Ltd, which holds 30% and Arun Bhatia of Telestra Tradeplace Pvt. Ltd, which holds 21% stake in the airline.