Ajit Singh warns of trouble even as AirAsia joint venture gets FIPB approval

NEW DELHI: The government has cleared Malaysian carrier AirAsiaBhd's proposal to start a passenger airline in India with the Tata Group but civil aviation minister Ajit Singh has said the venture could face procedural problems.

"AirAsia-Tata airline JV is facing procedural issues," Singh said at a CII conference here on Tuesday. He did not elaborate on what the hurdles could be, but said, "We will support Air Asia-Tata Sons airline joint venture."

Singh has been hinting at impending procedural issues for the AirAsia-Tata JV ever since the proposal got Foreign Investment Promotion Board ( FIPB) clearance on March 6, without spelling out what they could be.

The airline joint venture needs a no objection certificate (NOC) from the civil aviation ministry before it can apply for an air operating permit. This is being widely seen as a problem area as one of the key conditions necessary for grant of an NOC is the health of the domestic airline industry and its key players.

ET had reported earlier that the ministry might cite AirAsia's losses on its Southeast Asian routes and lack of airport infrastructure in India to delay or even deny permission.

Some of the country's leading airlines have also indicated their opposition to AirAsia's aircraft purchase programme.

AirAsia plans to scale up rapidly after it launches operations from its Chennai base with three or four A320s, a development that is being watched not only by budget airlines like IndiGo, but also by full-service carriers like Air India, which were able to garner better yields after the grounding of Vijay Mallya-promoted Kingfisher Airlines last year.

The proposed airline plans to begin operations by the fourth quarter of 2013.