Dogfight resumes over AirAsia stakeholding

Federation of India Airlines (FIA), an association of Indian airlines, has protested amendments in the aviation laws mainly related to 'substantial' holding, saying the rule changes were detrimental to national security, transparency and conventions.

Sources in FIA representing the older airlines IndiGo, SpiceJet, Go Air and Jet Airways, said the court should look into the matter after media reports said that the aviation regulator DGCA is likely to write to the government that it was not competent to examine documents that led to the grant of airline licence to AirAsia.

In a letter to Union civil aviation secretary R N Choubey, FIA said, "It appears that there is mala fide intent underlying the proposed amendment involving the deletion of the SOEC (substantial ownership and effective control) provision for AOP (airport operator permit) purposes, which would then create an administrative conflict forcing the DIPP (Department of Industrial Policy and Promotion) into making another change of policy for removal of SOEC from FDI also."

FIA's objections come days after the government notified the gazette on the amendments last month. In the AirAsia case, the court has asked the competent authorities (DGCA) to investigate commercial agreement executed by Air Asia with its parent company in Malaysia.

The letter said such a move could have serious repercussions on India's national security, as a foreign-owned & controlled "lndian" carrier will gain automatic access to defence airfields in lndia. Currently, civil enclaves at defence airfields are not open for foreign airlines. At present, only a select, extremely limited number of foreign carriers are allowed to operate to some defence airfields, that too only if and when the concerned country is granted access to the concerned airfield as a point of call.

"As such, MoCA has so far been able to limit such access to only friendly countries," the letter said.

According to FIA, on a global level ownership of an airline is generally understood to mean ownership of voting shares of the airline stock and "substantial ownership" usually equates to owning more than 50% of the voting shares. "Thus, majority ownership of voting shares is substantial. The question of "effective control" requires a deeper analysis, since it has nothing to do with numbers but rather with the question of who actually controls the airline" the letter said.

In response to the substantial ownership controversy, Malaysia-based AirAsia Group CEO Tony Fernandes had in February last year retaliated raising the question of whether owners of Indian carriers stay in the country. "Are owners of Indian airlines staying in India?" "For long airlines have been controlled by a few. Mostly NRI," Fernandes had further tweeted taking a dig at Jet Airways chairman Naresh Goel, an NRI based in London. Ratan Tata too had said that established carriers were using "monopolistic pressures" to retain "preferential treatment".

Both AirAsia and Vistara started operations in India after the easing of the FDI rule by the government. Tata Sons is a partner in both the airlines.