India's Central Bureau of Investigation (CBI) has raided five offices of AirAsia India across the country and opened an investigation into AirAsia Group chief executive Tony Fernandes, accusing him and his company of bribery and violating regulations to ease the airline's operations.
CBI documents said that the airline had conspired with various parties "to expedite the approval process and change in aviation policies to suit the company".
The bureau alleges that Fernandes along with other executives had violated "foreign investment norms" in its application for a licence, by controlling AirAsia India from Malaysia, making it a "de-facto subsidiary indirectly" rather than a joint venture.
"This structure was indirectly formalised through a "Brand License Agreement" signed between AirAsia lndia (represented by Fernandes) and AirAsia Berhad (represented by AirAsia Group deputy group chief executive Bo Lingam) on 17 April 2013, which indirectly made AirAsia India a de-facto subsidiary rather than a joint venture. As per the then FDI policy, foreign airlines are allowed to own up to 49% shares in domestic airlines but effective management control must remain with the Indian partner."
CBI also alleges that the company had "lobbied with unknown officials of the Ministry of Civil Aviation... to get favourable orders" and used bribes to secure a permit for the operation of international services. An effort was allegedly made in the civil aviation ministry to remove and amend the 5/20 rule - which had required India-based carriers to operate a minimum of five years and maintain a fleet of 20 aircraft before being allowed to go international.
"Tony Fernandes wanted the airline venture to be able to fly internationally from day one and their local Indian partner Tata Sons... would lobby to get all Government approvals including the then Foreign Investment Promotion Board clearance and amendment/removal of existing 5/20 rule."
Neither AirAsia India nor the group has put out a formal response to the investigation.
Launched in June 2014, AirAsia India is a 49:51 joint venture between the low-cost carrier group and Tata Sons. It currently serves only the domestic market.
Flight Fleets Analyzer shows that the carrier operates a fleet of 18 Airbus A320s.
Source: Cirium Dashboard
