Malaysia: Malaysian airline tycoon Tony Fernandes said he applied for a special form of Indian citizenship that would allow him to evade aviation rules restricting foreign ownership in India.
By becoming an “Overseas Citizen of India” (OCI), the AirAsia chief executive may be able to wholly acquire and fully control the airline’s Indian subsidiary, Bloomberg reported.
AirAsia India is a three-way joint venture between AirAsia, the Tata Group and a private investor, with the Malaysian group currently owning a 49 per cent stake.
Indian aviation rules that foreigners or foreign companies can only have up to a 49 per cent stake in local airlines, prompting a number of domestic Indian carriers to raise concerns that AirAsia India is foreign-controlled.
Mr Fernandes, whose parents are from India, told reporters in Hyderabad that he had submitted his application last week.
Mr Fernandes’ announcement comes days after news emerged that as many as 54,000 Malaysians have renounced their citizenship since 2010.
But according to the Indian publication The Economic Times, the Overseas Citizen of India status, which is open to people who have Indian origin roots, does not amount to dual nationality or dual citizenship.
Mr Fernandes is credited with turning around AirAsia, which was heavily in debt when he bought it for RM1 (S$0.34) in 2001.
Today, it has more than 200 planes operated by eight carriers in five countries – Malaysia, Indonesia, Thailand, the Philippines and India, The Straits Times reported recently.
Mr Fernandes also founded a Formula One team and is majority owner of English football club Queens Park Rangers.
With a net worth of US$230 million (S$312 million), he was ranked 45 in Forbes’ list of the 50 richest Malaysians in 2016. In 2015, he was also included in Time magazine’s list of the 100 most influential people in the world.
The divestment process of the flag carrier Air India (AI) took-off, after the government invited “Expression of Interest” to off-load 76 per cent stake and management control of the airline.
The Preliminary Information Memorandum (PIM) inviting “EoI” for the strategic divestment of AI, along with the airline’s shares in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) from private entities including the airline’s employees was issued on Wednesday. The central government owns 100 per cent equity of Air India. In turn, the airline holds full stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.
Accordingly, it has been planned to divest 76 per cent government stake in AI, 100 per cent in AIXL and 50 per cent in AISATS. “The Government of India has given ‘in-principle’ approval for the strategic disinvestment of AI by way of the transfer of management control and sale of 76 per cent equity share capital of AI held by GOI, which will include AI’s shareholding interest in the AIXL and AISATS,” said the PIM document.
The document detailed that apart from AIXL and AISAT, other subsidiaries of AI Group like AIESL (Air India Engineering Services Ltd), AIATSL (Air India Air Transport Services Ltd), HCI (Hotel Corporation of India) and AASL (Airline Allied Services Ltd), “will not be part of the proposed transaction”.
According to the memorandum, private entities should have a net worth of Rs 5,000 crore to be eligible to send in their EoIs for the proposed transaction. The entity is also required to have reported a positive profit after tax in at least three of the five preceding financial years.
“However, if the member of the consortium is a scheduled airline operator in India, the condition to meet minimum share of net worth/ACI requirement shall not apply to such member provided equity shareholding of such member is restricted to maximum of 51% of paid up equity share capital of the consortium,” the document said. “In case of a foreign airline, the requirement to meet minimum share of the Net Worth/ACI requirement shall remain applicable.”
On the debt restructuring, the PIM disclosed that the “existing debt and liabilities of AI and AIXL as on 31st March, 2017 are being reallocated and it is expected that debt and liabilities, including net current liabilities of Rs 88,160 million, aggregating to Rs 333,920 million will remain with AI and AIXL”.
“The balance debt shall be allocated to Air India Asset Holding Ltd which is 100 per cent owned by the GOI subject to receipt of requisite approvals from lenders and regulators, as applicable.”
Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Kumar Gupta said that non-core assets like buildings and others will be transferred to the SPV.
“Only the core assets which are essential for operation, they are being transferred with Air India. All non-core assets are being hived off to the SPV. It will be separately monetized,” he said.
Besides, the PIM had revealed that “Confirmed selected bidder” will be required to be invested in the airline for at least three years and keep the “substantial ownership and effective control” of both Air India and Air India Express vested with Indian nationals.
“It is the intention of GOI to divest its residual shareholding through the process of dispersed disinvestment (i.e. would not be sold as a block) on such terms as may be prescribed in the RFP,” the document read.
“Further, the confirmed selected bidder may be required to list AI on such terms as may be prescribed in the RFP. GOI may support such listing through proportionate offering in the listing process…”
The selected bidder will be allowed to use the “Air India” brand for AI business operations for a minimum specified number of years…” The last date of EoI submission has been set for May 14, 2018. Last month, Minister of State for Civil Aviation Jayant Sinha had said that the government plans to divest its stake in the national passenger carrier by this year-end.
In his Budget speech for 2018-19, Finance Minister Arun Jaitley had said: “The government has also initiated the process of strategic disinvestment in 24 Central Public Sector Enterprises. This includes strategic privatization of Air India.”
The airline is under a massive debt burden of over Rs 50,000 crore. Currently, the combined entity of AI and AIXL has an extensive network connecting around 43 international destinations and around 54 domestic destinations. The entity operated a fleet of 138 aircraft as of December 31, 2017 comprises 69 Airbus and 69 Boeing plans. IANS