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AirAsia India refutes claims of legal violations

AirAsia India has refuted allegations of wrong-doing, following the launch of investigations by India's Central Bureau of Investigation (CBI) in relation to accusations of bribery and violation of the country's aviation laws.

AirAsia India says that allegations of violation of foreign control norms are unfounded, as the Director General of Civil Aviation (DGCA) had "passed a .... 12 page order to this effect on 8 February 2017".

The DGCA order was issued after an investigation was mandated by the Delhi High Court in November 2016.

"The DGCA order effectively ruled that the operations and management of AirAsia India was in accordance with... the approval granted," says AirAsia India.

The CBI alleges that AirAsia Group chief executive Tony 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.

The bureau says the 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.

As per the then Foreign Direct Investment policy, foreign airlines are allowed to own up to 49% shares in domestic airlines but effective management control must remain with the Indian partner.

However, AirAsia India quotes the DGCA order, which had ruled that the terms of the "Brand Licence Agreement" were "meant only for ensuring uniformity of brand use and quality of services and that such terms are for benefit of passengers", and that it is "a common practice in the aviation industry".

"In this backdrop, AirAsia India believes that to allege that control of [the airline] is not in accordance with foreign exchange investment laws is incongruous," it says.

"AirAsia completely denies these accusations, and will vigorously defend itself against these to the fullest extent of law. Legal action to protect AirAsia and its interests against these allegations will be taken against any person who is known to have maliciously and frivolously instigated, and or smeared the good reputation of individuals and shareholders of AirAsia India," adds parent airline AirAsia.

Shares in the company slid as much as 10.6% to a one-year low on 30 May after CBI's launch of investigations.

While the outspoken Fernandes has not directly responded to the investigations, he posted a tweet in which he appeared to question the accuracy of media reports about the allegations: "Sometimes wonder about certain media. Who just wrote anything without checking any facts? Seriously wild stuff which are just plain wrong and inaccurate."

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