BackDGCA may avoid AirAsia scrutiny
DGCA may write to the civil aviation ministry to say that it is not competent to examine documents that led to the grant of an airline licence to AirAsia India
Premium
New Delhi: The aviation regulator is likely to write to the civil aviation ministry to say that it is not competent to examine documents that led to the grant of an airline licence to AirAsia India, said a government official familiar with the case.
In April, Mint first reported the relationship between AirAsia India and AirAsia Bhd—detailed in a brand licence agreement and emails—which effectively gives control of the former to the latter in contravention of Indian law, which mandates local control.
AirAsia India confirmed during a hearing at the Delhi high court on 11 November that such a brand licence agreement exists. The court then ordered AirAsia India to submit the brand licence to the Directorate General of Civil Aviation (DGCA), asking the aviation regulator to examine the document and report back to the court.
But the regulator looks at technical requirements to ensure the applicant airline is safe to fly, said the government official, who did not speak on record.
“The DGCA goes by CAP 3100," the official said, referring to the standard 276-page manual that has to be ticked by the applicant before a licence is granted.
But a scrutiny of the CAP 3100, available on the DGCA website, shows that under the sub-heading “demonstration and inspection prior to certification", DGCA makes the first few steps for an airline aspirant very clear.
“Company’s organizational structure, channels of communication, delegation of powers, financial strength and sources of funding will be subjected to detailed scrutiny to ensure that the company has sufficient resources, effective arrangement and control to satisfy its obligations," DGCA rules state.
Not only the brand agreement, but also emails between the AirAsia India and Malaysia show that the India unit’s then chief executive, Mittu Chandilya, did not even have the power to decide ticket pricing and that group founder Tony Fernandes had ordered that those running AirAsia India report to the group heads of AirAsia Malaysia, Mint reported in April.
The aviation ministry makes it clear that any passenger airline “shall not enter into an agreement with a foreign investing institution or a foreign airline, which may give such foreign investing institution or foreign airlines or others on behalf of them, the right to control the management of the domestic operator."
The applicant also needs to submit a “copy each of the certificate of incorporation and Memorandum and Articles of Association" and “other resources (attach supporting documents such as balance sheet, bank certificates etc.) as also “any other information" that may be required by ministry or the DGCA.
AirAsia India CEO Amar Abrol declined to comment on the submission of the brand agreement to DGCA. He said AirAsia, which had eight Airbus A320 planes, will not be expanding during the winter, which is the fog season, and will restart expansion after that.
AirAsia Malaysia, through AirAsia Investment Ltd, owns 49% in AirAsia India. The Tata group owns 49% and two directors of AirAsia India —S. Ramadorai and R. Venkataramanan—hold the rest.
Civil aviation secretary R.N. Choubey said the Enforcement Directorate has already filed a case to investigate fraudulent transfers of money by AirAsia during the course of its starting up.
“We will see," Choubey said, when asked what he will do when the DGCA tells the civil aviation ministry that it is not competent to vet the brand licence agreement.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
