AirAsia waits for clarity on proposed rules

Hyderabad: Budget airline AirAsia on Saturday said it will wait for clarity on proposed aviation regulations before unveiling expansion plans for India.

Terming the proposed guidelines "bizarre", AirAsia CEO Tony Fernandes told reporters here that they were aimed at targeting new players and protecting the existing carriers.

Fernandes was here for the unveiling of the fourth aircraft of AirAsia India, the joint venture airline between Tata Sons and AirAsia Berhad.

He said they would persuade the government to drop the proposed rules that require domestic carriers to accumulate certain points by flying locally before they are allowed to fly international routes.

Making it clear that AirAsia will not give up the India market, he said every market had been a challenge and that the challenges did not scare the carrier.

Mittu Chandilya, CEO, AirAsia India, said they would announce new routes in a week. He said the airline would add two more aircraft in two months.

Asked why the airline had not been as aggressive in India as was expected, Chandilya said they want clarity before announcing new routes. "We want clarity on regulations. There is no point in rushing in and then changing everything," he said.

Fernandes said he cannot understand the logic behind the proposed rules except that the incumbents managed to persuade the government to stop the new airlines.

He said these would block new investments from coming into the aviation sector and mean less connectivity and less jobs for India.

"We want to have more international connectivity to places like Hyderabad, Bengaluru or Tiruchy. Why do you stop this? I can't see the logic," he said, wondering why inefficient airlines who are unable to make money should be protected and others who want to invest be stopped.

Fernandes said besides existing players, foreign airlines are also favoured as they are allowed to fly to any point in India. "An airline (AirAsia India) in which 51 percent is owned by Indians can't compete with Emirates, Qatar or FlyDubai," he added.

"AirAsia will fight those who try to protect the status quo by lobbying for antiquated rules. Indian people must be put first before those who just lobby to protect their bottom line as opposed to competing," he said referring to 5/20 rule under which Indian airlines are required to have a minimum fleet of 20 aircraft and 5 years of operational experience for starting international services.

Stating that open access, freedom of movement and competition was good for India, he said India was like a continent and its tourism has immense potential which need to be unlocked.

"The government should make ensure ease of doing business. I don't believe these rules will facilitate that. I think (Prime Minister Narendra) Modi has not seen the impact of this on airline investment and jobs," he said.

Stating that domestic tourism has huge potential for the country, Fernandes called for making flying cheaper by doing with the existing high taxes.

Asked about the delay in adding Mumbai and Delhi to its routes, he said they would like to serve the under-served routes. He pointed out that 50 percent of AirAsia's routes in Malaysia, Indonesia and Thailand are new routes.

Chandilya said their focus was on tier-II cities. The airline started with Bengaluru and Goa and expanded to Chandigarh, Jaipur, Pune, Cochin and Chennai.

S. Ramadorai, non-executive chairman for AirAsia India, said the tourism potential can be unlocked by allowing competition, citing the example of the information technology industry which created almost 3.3 million jobs, as well as 10 million indirect jobs, and total exports crossed $100 billion.

Referring the massive tourism potential, Ramadoraoi said if it was unlocked, it can almost wipe out entire oil import deficit of the country.