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The Foreign Investment Promotion Board (FIPB) on Wednesday cleared the proposal by AirAsia Bhd to launch AirAsia India along with the Tata group and Bhatia’s Telestra Tradeplace Pvt. Ltd, allowing the partners to formally launch the process of setting up the new airline. Photo: AFP (AFP)
The Foreign Investment Promotion Board (FIPB) on Wednesday cleared the proposal by AirAsia Bhd to launch AirAsia India along with the Tata group and Bhatia’s Telestra Tradeplace Pvt. Ltd, allowing the partners to formally launch the process of setting up the new airline. Photo: AFP
(AFP)

We are persuading Ratan Tata to be our chairman: Arun Bhatia

Bhatia says he is aware that the proposal has to clear more regulatory hurdles before it can start operations

Arun Bhatia, co-founder of AirAsia India, said he is trying to persuade Ratan Tata to be chairman of the proposed airline. The Foreign Investment Promotion Board (FIPB) on Wednesday cleared the proposal by AirAsia Bhd to launch AirAsia India along with the Tata group and Bhatia’s Telestra Tradeplace Pvt. Ltd, allowing the partners to formally launch the process of setting up the new airline.

AirAsia, led by Tony Fernandes, will hold a 49% stake in AirAsia India, Tata Sons Ltd will own 30% and Arun Bhatia’s Telestra Tradeplace Pvt. Ltd the remaining 21% in the company. Bhatia said he is aware that the proposal has to clear more regulatory hurdles before it can start operations. Arun Bhatia’s son Amit is married to Vanisha Mittal, the only daughter of billionaire L.N. Mittal, chairman of ArcelorMittal. Edited excerpts from an interview:

Will Ratan Tata be the chairman of AirAsia India?

We are hoping that he would be on our board and be our chairman. He is a great man. We are persuading him to be our chairman. But he has to see his convenience and time for this venture.

Tony Fernandes tweeted about appointing a Chennai-based person as CEO of AirAsia India...

No. We have not appointed anybody. We are looking for prospective and potential candidates for that. Once we get that, we will discuss the same in the board.

Will the CEO be an Indian? Is it necessary that the person should be from the aviation industry?

Certainly, he will be an Indian and it is not necessary that he should be from aviation industry. We are examining all possibilities of the same.

There were reports that a foreign airline can invest only in an existing airline?

This is not true. There is no such clause in the current foreign direct investment policy. And this was confirmed by the Foreign Investment Promotion Board by giving clearance to us.

When do you want to start operations?

As we said, we are looking at starting operations by the end of this year. But it all depends upon the necessary regulatory approvals.

But you had crossed the biggest hurdle—FIPB?

No, we have just crossed one hurdle of FIPB. There are more regulatory clearances required for AirAsia India. We have to get clearances from Directorate General of Civil Aviation (DGCA). DGCA is a power centre by themselves. There are more hurdles before we start operations.

What is the rationale behind you entering the bleeding Indian aviation industry? Was it just Tony Fernandes?

No. We were extremely passionate about the industry. And we were looking at this industry for the last two years. We are bullish about the Indian aviation sector. But when you get illustrious and valuable partners like Tata group and Tony Fernandes, we should enter the industry eyes closed, no?

So, partners fuelled the idea?

Indeed. Partnership is critical in this business. You need to get competent and progressive partners for this business. See our partners, they are fabulous. Look at Tony Fernandes. He is running a profitable airline in low-fare segment for years. Tata group is honest and diligent. With Ratan Tata involved in this deal, as I said, we can just enter this sector eyes closed.

What is the vision for your AirAsia India considering the market structure? How different it would be from existing domestic carriers?

Our idea is to start a low-fare carrier for ordinary persons in India. There would not be any frills. AirAsia India would be an airline that every Indian can afford. I know that it is not too easy to win the Indian market. Certainly, we need to be different from others. At the same time, we need to be profitable and fashionable. To add, we will not compromise on safety and security.

On a branding perspective, how different would be AirAsia India considering the country had a household name Air Deccan and an existing successful brand called IndiGo?

We have a different business model from existing Indian carriers. And every brand should be different. Air Deccan was a great brand and IndiGo is also successful. We are working out details for competitive branding.

Would you be unleashing Re 1 fares in India?

On realistic terms, who can afford Re 1 fare at this situation? We need to offer low fares without compromising profitability. One has to position the product right both for airline and passengers.

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