AirAsia India’s Brand Licencing Agreement does not violate ownership norms: DGCA

By: | Published: February 9, 2017 11:47 PM

Aviation regulator DGCA has said the Brand Licencing Agreement (BLA) of AirAsia India does not violate the "substantial ownership and effective control" norms.

AirAsia, Malaysia-based, Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia, Rolls-Royce corruption, corruption scandal, SFOAirAsia India, a joint venture between the Tatas and Malaysia?s AirAsia Berhad, commenced operations in June 2014. (Reuters)

Aviation regulator DGCA has said the Brand Licencing Agreement (BLA) of AirAsia India does not violate the “substantial ownership and effective control” norms.

The Directorate General of Civil Aviation’s (DGCA) conclusion comes after a detailed review of the BLA that was directed by the Delhi High Court in November 2016. The report has been submitted to the court.

AirAsia India, a joint venture between the Tatas and Malaysia’s AirAsia Berhad, commenced operations in June 2014.

While Tata Sons holds 49 per cent, its two directors — S Ramadorai and R Venkataramanan — have 0.5 per cent and 1.5 per cent shareholding, respectively, in the airline. The remaining 49 per cent is with AirAsia Investment Ltd.

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The BLA is between AirAsia Berhad (licensor) and AirAsia India (licensee). Under the pact, AirAsia India has been permitted to the operate scheduled air services under the trade name and livery of the licensor.

“Based on the review of BLA along with provisions of Aircraft Rules, 1937 and… definition of control as provided in the FDI policy, I do not find that the terms and conditions laid down in BLA dilute the substantial ownership and effective control of AirAsia India being vested with the Indian nationals,” the regulator said.

“Further, status on issuance of AOP to AirAsia India does not change,” DGCA Director General B S Bhullar said in the report submitted to the Court.

The regulator has put up the report on its website.

There have been concerns expressed in certain quarters about the control at the budget carrier.

Following the Delhi High Court order, DGCA reviewed the BLA to check about the control of AirAsia India in the context of Aircraft Rules and FDI norms.

DGCA also said the BLA itself provides for compliance with applicable laws of India and also mandates the parties that ‘substantial ownership and effective control’ of the licensee remains, at all times, with Indian residents.

While sharing the report of DGCA — which reviewed the BLA — submitted to the Delhi High Court, AirAsia India said it remains committed to the Indian aviation industry.

“As an Low Cost Carrier (LCC) operating in India, we are supportive of the government and aviation industry’s initiatives and policies and will continue to expand our network in regional India.

“Our expansion is on track, demonstrated through triple digit revenue for the first time since inception in December 2016…,” the airline said in a release today.

AirAsia India, which currently has eight planes, is expected to have a fleet of 20 aircraft by mid 2018.

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