Are owners of airlines living in India?: AirAsia’s Tony Fernandes

Mumbai: AirAsia Group Bhd founder and chief executive officer Tony Fernandes on Saturday raked a fresh controversy by asking whether all promoters of domestic airlines are living in India, hinting at Naresh Goyal, chairman of Jet Airways (India) Ltd.

Goyal, founder of India’s largest airline by passengers carried, is a London-based non-resident Indian (NRI).

A week after Tata Sons Ltd chairman emeritus Ratan Tata, in a tweet, favoured waiver of the so-called 5/20 rule, Fernandes said: “Quite crazy 5/20 hasn’t been solved. Are owners of Indian airlines living in India. Naresh (Goyal)? NRI.”

Under the so-called 5/20 rule, new airlines—including Vistara and AirAsia India, both co-owned by Tata group—must fly local for five years and secure 20 aircraft before venturing abroad.

Vistara, which is run by Tata SIA Airlines Ltd, completed one year of operations in January, while AirAsia India will complete two years in operations shortly.

AirAsia India is a joint venture in which AirAsia Bhd holds 49%, Tata Sons Ltd 41% and Arun Bhatia of Telestra Tradeplace Pvt. Ltd the rest.

Indian law allows a foreign company to own up to 49% in an airline. It also allows foreign airlines to invest up to 49% in an Indian airline. An NRI is allowed to hold 100% in an airline.

“Indians need more Tourism. More jobs. Only country in the world with a 5/20 rule. Malaysia has foreign airlines operating here. No issue,” Fernandes wrote in his microblogging site Twitter on Saturday.

Fernandes’ tweet comes in the backdrop of the Federation of Indian Airlines (FIA)—which represents IndiGo, Jet Airways, SpiceJet Ltd and GoAir—on Wednesday alleged that a previous statement by Ratan Tata demanding open skies was in self-interest and pointed out towards ownership issues.

The co-founder of IndiGo, run by InterGlobe Aviation Ltd, is US-based investor Rakesh Gangwal.

FIA pointed out that in AirAsia India, the Indian majority ownership is spread between two independent unrelated Indian shareholders who effectively have less shareholding then the foreign partner, AirAsia Group Bhd.

“De facto therefore, AirAsia Malaysia is the largest shareholder. In the case of Vistara, the chief executive is seconded from Singapore Airlines,” FIA had alleged.

Tata Sons had countered this argument pointing out that the majority ownership and effective control of both airlines are with the Indian parties as per the government’s requirement. Further, all the important decisions concerning the day-to-day operations of the airlines are taken by the management teams of these airlines under the overall supervision, control, and direction of the respective boards of directors (which include a majority of Indian nationals), it said.

These boards are chaired by long-time Tata veterans S. Ramadorai (AirAsia India) and Bhaskar Bhat (Vistara).

In a reply to a tweet on whether Malaysia would allow to set up a joint venture airline with an Indian airlines, Fernandes on Saturday said: “I can’t see why not. There is an Indonesian airline operating a Malayaian AOC (air operating certificate).”

“People of India, your voice needs to be heard more. For to long airlines have been controlled by a few. Mostly NRI. Competition is needed,” Fernandes said.