After the country eased rules to allow overseas carriers to invest upto 49 percent, Malaysian carrier AirAsia with Tata Sons and Telestra Tradeplace Pvt is seeking approval to establish a joint venture in India. Speaking to CNBC-TV18, Jitendra Bhargava, former ED of Air India welcomed the move.
In his view, the government must allow a new carrier to come to in. "India needs airline which is committed to passengers and not to their commercial interest", he adds.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: Just wanted to gather your reaction to this news?
A: It is a very welcome decision, considering that Tata's were the architect of civil aviation in India. Their airline Air India has witnessing turbulence of late, so if Tata comes back and leads the Indian aviation there cant be a bigger tribute to the architect founder JRD Tata.
Coming to the basic issue the government must allow a new carrier to come in. India needs one after Kingfisher’s exit. We also need airline which is committed to passengers and not to their commercial interest. That has been lacking off late, as the recent hike in fares has seen following Kingfisher’s exit in the market.
Q: While AirAsia has said that they will hold 49 percent and that the Tata Sons will hold 30 percent in this joint venture, will this really find approval as Foreign Investment Promotion Board (FIPB) is concerned because it has to be an Indian majority held entity, what are your thoughts?
A: These companies must have done ground work before making it public. Once it comes out, one will have to see what happens. If their proposal is ultimately approved we should foresee no problems.
Indian aviation, but relating to policies has functioned in a slightly vitiated environment. There some players have wheedled a lot of clout on policy makers. I only wish the decision by the government is guided by customer’s interest and no other factor.
As regarding to the composition of who holds how much of equity, I am sure they will do their homework and conform to the policy. The policy can certainly not be modified to suit one player.
Q: How do you think the model in the Indian aviation space is going to change given that for the first time probably we are going to see a foreign airline coming into India and partnering with an Indian company?
A: You have to look in the context that if they were exiting players then naturally they will get a foreign airline as a partner. However, if the market is going to witness a new player into the market then one can have a foreign airline taking the initiative.
Adherence to policy will be the critical factor. Who initiates the subject is a different matter. However, when one is applying to the government they will have to conform to the policy. There cannot be any violation of it.
I am sure, whether it is AirAsia or Tata’s or the third party, they would have taken into consideration these factors, before going public.