Thursday, February 09, 2017

Directorate General of Civil Aviation gives clean chit to Air Asia India: Regulator says commercial agreement with AirAsia Malaysia doesn't violate norms

The Directorate General of Civil Aviation (DGCA) has decided that a commercial agreement between AirAsia India and its Malaysian part-parent, AirAsia Berhad, does not violate the law of the land.

The regulator has concluded the nature of the agreement is in full compliance with the Aircraft Rule, 1937, which governs aviation here. And, that no terms or conditions of the Brand Licensing Agreement dilutes the substantial ownership and effective control (SOEC) clauses regarding AirAsia India.

The regulator’s view essentially eliminates chances of an adverse court ruling, which would have put the airline’s future in question and even have led to suspension of its license. 

The high court in Delhi had asked AirAsia India to send its brand licensing agreement to DGCA for examining. The case was filed by Subramanian Swamy, ruling party MP and the Federation of Indian Airlines, comprising the older entities in the segment. They’d both contended the agreement violated the condition on SOEC, which says control of an airline should be in India and be run by Indian nationals.

The agreement signed between Bo Lingam, operations head of AirAsia Bhd and Tony Fernandes on behalf of AirAsia India mandates that the latter strictly complies with the parent airline’s requirements on various operational aspects. These include branding, catering, inflight services, engineering, finance, flight operations, marketing and network planning.

“I do not find that the terms and conditions laid down dilute substantial and effective control of AirAsia India being vested with Indian nationals. Further status of the AOP (air operator permit) issued to AirAsia India doesn’t change,” DGCA chief B S Bhullar wrote.

Asked by this newspaper, AirAsia group chief executive Tony Fernandes said the regulator was fair to the airline.

“We have had non-stop attacks since launching the airline. But, the team has remained focused in its job. We didn’t get sidetracked by the noise which was previously driven by our competitors. I thank the Indian regulator for being fair.” 

Bhullar says AirAsia Bhd’s guidelines regarding services like ancillaries, branding and inflight services ensure passengers have the same standard of service when they fly across the world. 

Regarding flight operations of the airline being controlled from Malaysia, the regulator feels this is according to the operations manual of DGCA and executives have been appointed who can be held accountable in case of non-compliance.


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