Mumbai: A new rule called '5/20' was implemented and a controversy has surged up, following it.
The '5/20' rule as it is been called, decrees that new airlines like Vistara and AirAsia India must fly local for a maximum of 5 years along with the necessary securing of at least 20 aircrafts, before setting their feet abroad.
Tony Fernandes, CEO and founder of AirAsia Group Bhd, tweeted on Saturday: "Quite crazy 5/20 hasn't been solved. Are owners of Indian airlines living in India. Naresh (Goyal), NRI".
This is believed to be the reaction to Ratan Tata's favoring of the 5/20 rule.
To explain the situation further, Fernandes was signaling to Federation of Indian airlines – which represents IndiGo, Jet Airways, SpiceJet Ltd. And GoAir – allegation that Tata is favouring the rule following self-interest and ownership issues.
Vistara co-owned by Tata Sons is essentially controlled from Singapore. Whereas, it is also worth mentioning that Air Malaysia is the largest shareholder.
AirAsia India, India's largest airline founded by a London-based NRI, Naresh Goyal, is a joint venture in which AirAsia Bhd holds 49%, Tata Sons Ltd. 41% and the rest by Arun Bhatia of Telestra Tradeplace Pvt. Ltd.
Under the Indian laws, a foreign company can own and invest up to 49% on any Indian airline, while an NRI can hold a full 100% share in an airline.
The Tata Sons refuted the allegations, claiming that the day-to-day operations and major decisions are taken by the board members, which comprises a wholesome part of Indian residents. And also that an essential share of the ownership rests with the Indian parties as per the Government's requirement.
Whereas Fernandes replying to a tweet, said that he can see no reason why Malaysia should not be allowed to set up a joint venture with the Indian airlines. He also mentioned of an Indonesian airline that is already operating a Malaysian AOC (air operating certificate).
In a final tweet, Fernandes remarked: "People of India, your voice needs to be heard more. For too long, airlines have been controlled by a few. Mostly NRIs. Competition is needed". (Input from agencies)