FIPB to consider AirAsia FDI proposal on March 6

NEW DELHI: The Foreign Investment Promotion Board will take up on March 6 the investment proposal of Malaysian budget carrier AirAsia which seeks to enter India through a joint venture with the Tata Group and another company.

The investment proposal of AirAsia Investment Ltd, Malaysia, has been listed in the agenda of the FIPB meeting scheduled on March 6.

The FIPB is the apex inter-ministerial body headed by the finance minister that clears foreign investment proposals.

AirAsia has applied to FIPB to pick up 49% in a venture with Tata Sons Ltd and Arun Bhatia's Telestra Tradeplace Pvt Ltd, the Malaysian company had said earlier this week.

If cleared by FIPB, this will be the first entry of an foreign carrier in the domestic airlines after the government liberalised the aviation FDI policy in September. The new policy allows foreign carriers to invest in Indian airlines.

The new airline is looking to start flying from this year-end with 3-4 planes and an initial investment of about $50 million by the Malaysian budget carrier. It will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week.

As per current rules, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.

Tata Sons, the holding company of the $100-billion salt-to-software conglomerate, will hold 30% in the joint venture but will not have any operating role in the airline.

This will mark the return of the Tatas to aviation. State- owned Air India had grown out of Tata Airlines, which began flights in 1932.

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FIPB to take up Air Asia’s proposal on March 6 New Delhi, Feb 22:

The Finance Ministry will take up Malaysian airline AirAsia’s proposal to operate in India jointly with the Tata Group and Telestra Tradeplace early next month.

The Foreign Investment Promotion Board, scheduled to meet on March 6, will consider 18 proposals which also includes one by European airline Farnair Switzerland which entered the cargo segment in India last year.

AirAsia has sought FIPB approval for taking 49 per cent stake – the maximum allowed in the existing FDI policy – in a joint venture with Tata Sons Ltd, the pioneer of airline services in India, and Arun Bhatia’s Telestra Tradeplace Pvt Ltd.

Tata Sons is likely to hold 30 per cent stake in the company while the remaining 21 per cent share will be Telestra’s. The venture will mark Tata Group’s return to the aviation sector almost 60 years after it exited the business following nationalisation of Air India in 1953.

AirAsia will initially invest about $30-55 million in the proposed venture and would start operations with three to four Airbus A-320 aircraft, AirAsia CEO Tony Fernandes had said on Thursday.

The proposed joint venture will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week. It will give both Delhi and Mumbai a miss in the initial phase.

In India, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.

The FIPB will also consider a proposal from European airline Farnair Switzerland which bought a substantial stake in Quikjet Cargo Airlines Pvt. Ltd last February. Tata Capital Ltd is one of the key investors in Quikjet Cargo.

The airlines operates both cargo and passenger airlines in Europe but did not have the option to apply for the passenger segment last year as the FDI rules at that time did not permit it.

Other cases to be considered by the Board include proposals by Highdell Investment Ltd from Mauritius, Yes Bank, ICICI Venture Funds, SIDBI Social Venture Trust and Barefoot Resorts and Leisure.

 

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