Ghost of 5/20 may haunt GoAir

Wa­dia group-pro­moted airline sought re­lax­ation even be­fore Air Asia In­dia

Financial Chronicle - - FRONT PAGE - NIRBHAY KU­MAR New Delhi

AMID a CBI probe into al­le­ga­tions of Air Asia In­dia lob­by­ing with the avi­a­tion min­istry for eas­ing over­seas fly­ing norms, it has now emerged that it was Wa­dia group-pro­moted GoAir that first sought re­lax­ation in the el­i­gi­bil­ity cri­te­ria.

A top in­dus­try source told FC that GoAir wrote to the min­istry in March 2012, seek­ing re­lax­ation in 5/20 rule that re­quired a lo­cal airline to op­er­ate flights in do­mes­tic skies for min­i­mum five years be­fore seek­ing per­mis­sion for for­eign oper­a­tions.

The source also main­tained that in­dus­try de­mands for changes in rules and in­cen­tives can­not be cat­e­gorised as lob­by­ing. The work on abol­ish­ing the 5/20 rule in fact started “clan­des­tinely” in the last few months of the UPA-II regime and even some of the of­fi­cers con­cerned were not kept in the loop, the source added.

To be sure, the rule could not be re­laxed then as dates for the 2014 Gen­eral Elec­tions had been an­nounced and the model code of con­duct was in place bar­ring the gov­ern­ment from tak­ing ma­jor de­ci­sions. It was fi­nally re­laxed by the Modi gov­ern­ment, which made it a part of the Na­tional Avi­a­tion Pol­icy, 2016, touted as the first such doc­u­ment in the his­tory of In­dian avi­a­tion.

“Apart from Air Asia, there was an­other airline which ex­erted more in­flu­ence for changes in the con­tro­ver­sial rules,” the source said.

Air Asia In­dia has ve­he­mently de­nied lob­by­ing and bribe al­le­ga­tions. Com­pany di­rec­tor Shuva Man­dal last month had re­futed any wrong-do­ing on its part in se­cur­ing fly­ing li­cence or chang­ing guide­lines for in­ter­na­tional fly­ing.

“IndiGo, GoAir and oth­ers were in favour of re­lax­ing the 5/20 rule but they started op­pos­ing it the mo­ment for­eign air­lines like Vis­tara and Air Asia In­dia came in to pic­ture. Through Fed­er­a­tion of In­dian Air­lines (FIA), they wrote to the min­istry against the pro­posed move to change the rule,” the of­fi­cial quoted above said.

The 5/20 rule re­quired a do­mes­tic airline to op­er­ate flights in do­mes­tic skies for five years and have a min­i­mum fleet size of 20 air­craft be­fore seek­ing per­mis­sion for for­eign oper­a­tions. Air Asia In­dia was started as a three-way joint ven­ture by Tata Sons (30 per cent), Malaysian car­rier Air Asia (49 per cent) and Te­lestra Trade­place (21 per cent) in June 2014. In Au­gust 2015 the Tatas in­creased their stake to 41 per cent in the airline by ac­quir­ing stakes of Te­lestra.

Sub­se­quently, Tata Sons fur­ther raised the stake in the loss-mak­ing JV to 49 per cent buy­ing 7.94 per cent hold­ing of Arun Bha­tia's Te­lestra Trade­place. Two of its se­nior ex­ec­u­tives S Ra­mado­rai and R Venkatara­manan took the re­main­ing 2 per cent stake of Te­lestra in their in­di­vid­ual ca­pac­i­ties ef­fec­tively tak­ing the busi­ness con­glom­er­ate's stake to 51 per cent. Vis­tara is also a Tata group joint ven­ture with Sin­ga­pore Air­lines hold­ing 49 per cent in the com­pany.

The CBI has reg­is­tered a case against Air Asia Group CEO Tony Fer­nan­des and oth­ers over al­leged lob­by­ing for chang­ing avi­a­tion rules. It has also named Tata Trusts nom­i­nee on the board of the airline R Venkatara­manan in the case and is in­ves­ti­gat­ing his role in the af­fairs.

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