AirAsia may be first to enter India

NEW DELHI: Asia's largest low-cost carrier (LCC) AirAsia may be among the first global players to invest in India with the government allowing foreign airlines to invest in Indian carriers. It is learnt that instead of investing in an existing carrier, the Malaysian LCC is looking at the possibility of a start-up with a strong Indian partner.

AirAsia chief Tony Fernandessaid in an email to TOI: "We will make statements in due course." Last Friday, after Cabinet's decision to allow foreign airlines to have up to 49% stake in an Indian carrier, Fernandes had tweeted: "Fantastic news that India has opened up investment to foreign airlines... Great that Indian government has put people first. Will we be in India. Well, let's see."

AirAsia currently flies between Kuala Lumpur and five Indian cities - Kochi, Trichy, Chennai, Kolkata and Bangalore. Additionally it also connects Bangkokwith Chennai and Kolkata. The LCC had pulled out of Delhi and Mumbai in March due to high airport charges. The Malaysian LCC already has subsidiaries in Thailand, Indonesia, Philippines and Japan. One of its other subsidiaries, AirAsia X, is possibly the only long-haul LCC in the world.

India-registered carriers at present can fly abroad only after completing five years of service and if they have a fleet of over 20 aircraft. So under current rules, a startup launched by a foreign airline will use its domestic flights to act as feeder for flights to their main hub and then offer connectivity to the rest of the world. But the aviation ministry is reviewing the 20-aircraft, five-year rule as no country applies such stringent conditions on its airlines. If that change happens, a new India-registered carrier could also be allowed to fly abroad much faster.

Apart from AirAsia, other global LCCs like Tiger ( Singapore), EasyJet(US) and RyanAir(UK) are also learnt to be looking at India. Sources said that foreign airlines eying startups would look for strong local players which, at present, are not in aviation space in India. Among existing carriers, SpiceJet-which has admitted to being in talks with a Gulf carrier-and GoAir could be the first to get funding and technical expertise from foreign airlines. Whether Kingfisher, with debt over Rs 8,500 crore, gets an investor remains to be seen.

While India's traffic potential is mouth-watering for airlines of our neighboring areas-many of who depend solely on India to fill their wide body aircraft-they say some issues need to be sorted out to attract investment. These are rationalizing aviation turbine fuel price by tackling the twin issues of high sales tax on it and the high price set by oil PSUs. A combination of these two factors has made ATF in India for domestic flights among the most expensive globally. The other issue is high airport charges in Delhi, which was recently allowed by the government to hike its charges by 346% in one go.

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