AirAsia India finally gets flying permit after 6-mth wait

Written by Rhik Kundu | Mumbai | Updated: May 8 2014, 04:00am hrs
AirAir Asia is expected to start its operations in India by July this year. AP
AirAsia India has finally got the Air Operator Permit (AOP), which was required by the airline to start its operations in the country, after nearly a six month wait.

This is subject to a July 11 decision of Delhi High Court, when it will hear a plea from Bharatiya Janata Partys Subramanian Swamy and Federation of Indian Airlines (FIA) against granting operational status to the airline.

The Chief Executive of the airline, Mittu Chandilya, on Wednesday tweeted saying , Boom! 1815Hrs (IST) today AirAsiaIndia was born.So proud of my team.Who is ready to revolutionize Air Travel in India.

The airline is expected to start its operations by July. A senior AirAsia India official had recently told FE that the airline would start its operations by July, provided it got the AOP by May.

The road to start its operations in India had been marred by delay and litigation for the airline, which had earlier aimed at starting commercial operations by the January-March 2014.

This was delayed to March-May period after Directorate General of Civil Aviation (DGCA) called for public objections to the launch of the airline on January 20. The airline had earlier obtained approval from the Foreign Investment Promotion Board (FIPB) on April 2013, which cleared the $30-million deal to launch AirAsia India. The Civil Aviation Ministry gave a no-objection certificate (NOC) to the airline during September last year.

"There is already an over capacity in the industry. We have seen drastic price wars and airlines' with bleeding balance sheets. With AirAsia India becoming operational this is likely to continue," said Deep Narayan Mukherjee , ‎Senior Director at India Ratings & Research - A Fitch Group Company

The last leg of regulatory formalities with officials of the DGCA onboard the airlines first Airbus A320, was completed on May 1.

The airline also got a breather from the Supreme Court in May, when the apex court refused to pass any interim order on a plea by Bharatiya Janata Partys Subramanian Swamy seeking to restrain approvals to operationalize the AirAsia India deal.

DGCA has granted the airline in-principle approval to import 10 Airbus A-320-200 aircraft in December last year.

Industry experts say that the arrival of AirAsia India is a good news for the fliers, as the fares are expected to drop further with possibilities of intense price wars continuing to loom in future. However, the balance sheet of the airlines are expected to be weak, as a result of the competition, in the next couple of quarters AirAsia India, which received its first aircraft Airbus A320 in Chennai on March 22, 'plans to start its operations with four aircrafts', a senior official with the airline told FE. The airline's fleet will consist entirely of Airbus 320 aircraft.

In a statement in March 22, while unveiling its first aircraft, it said that the aircraft (A 320) is configured in an all economy layout with 180 seats and powered by CFM engines.

AirAsia Indias fleet will be drawn from the 475 planes order of Aibrus A320 family aircraft ordered by the AirAsia Group, the airline has said in a staement in March.

Our CEO @MittuChandilya with Air Operators permit.What a battle that was. proud day for me and all airasia all stars, tweeted Tony Fernandes on Wednesday.

AirAsia India is a joint venture between AirAsia 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.


* AirAsia India issued air operator permit on Wednesday

* Low-cost AirAsia's entry seen increasing price competition

* Most carriers in Indian aviation market losing money

AirAsia wins Indian permit to start airline, increasing competition

(Reuters) - AirAsia's low-cost Indian joint venture airline has won an operating permit, paving the way for the carrier to launch services and increasing competition in a market where most airlines are losing money.

The Directorate General of Civil Aviation (DGCA) issued the air operator permit, the last approval required to launch an airline, to AirAsia India on Wednesday, a senior government official said. AirAsia India Chief Executive Mittu Chandilya confirmed the company had received the permit.

"I can't wait for us to start flying," he told television channels. "We are working on being the lowest cost (airline)."

It was not immediately known when AirAsia India, a three-way venture between the Malaysia-based low-cost airline, India's Tata Group and investment firm Telestra Tradeplace, would start services.

Earlier plans to start the airline in the last quarter of 2013 were delayed, pending the air operator permit.

An airlines industry body, and a politician of India's main opposition Bharatiya Janata party, which is the favourite to form a government after a general election ending this month, had opposed AirAsia's entry into the Indian market.

AirAsia India has said it will offer one of the lowest fares to lure travellers and will rapidly expand its fleet by adding 10 Airbus A320 planes a year. But the entry of a new competitor is not good news for an industry where all carriers except market leader IndiGo are losing money.

High fuel prices, taxes and fees have squeezed existing Indian airlines. The sector lost a combined $1.3 billion in the financial year to March, according to estimates by aviation consultancy Centre for Asia Pacific Aviation (CAPA).

"Domestic airlines continue to be very precariously placed and AirAsia's entry will further challenge the existing airlines," said Kapil Kaul, South Asia CEO at CAPA.

The arrival of new carriers like AirAsia may lead to a price war and will further hurt passenger yields, Kaul said.

Singapore Airlines' joint venture with the Tata Group to start a full-service airline in India is awaiting an operating permit.

India has five operational national carriers and one regional airline. Competition had eased after the grounding of cash-and-debt-strapped Kingfisher Airlines in October 2012.

In 2012, the Indian government relaxed rules allowing foreign carriers to buy up to 49 percent in an Indian airline. Abu Dhabi's Etihad last year bought 24 percent of Jet Airways , the No.2 carrier by domestic market share.