The CBI on Tuesday carried out multiple raids in connection with its ongoing probe against top officials of AirAsia over alleged violation of norms for getting international flying licences for the airline. The agency filed an FIR against Tony Fernandes, a Malaysian billionaire and the chief executive of AirAsia Group Berhad, besides AirAsia’s Director and Managing Trustee of Tata Trusts R Venkatraman, and controversial lobbyist Deepak Talwar.
The case relates to alleged violation of norms by directors of the aviation company for relaxation of 5/20 rules in the aviation sector to get licences for international operations, as well as violation of Foreign Investment Promotion Board (FIPB) rules.
According to the CBI, the agency carried out searches at six locations in Delhi, Mumbai and Bengaluru at properties belonging to the Malaysian carrier. Total Food Services owner Sunil Kapoor, Singapore-based SNR Trading Company Director Rejendra Dubey and unidentified public servants have also been named as accused in the FIR.
AirAsia has denied all charges levelled against it. “AirAsia India limited (AAIl) refutes any wrongdoing and is cooperating with all regulators and agencies to present correct facts. In November 2016, the AAIl had initiated criminal charges against its ex-CEO and also commenced civil proceedings in Bengaluru,” said Air Asia responding to the CBI’s actions on Tuesday.
According to the 5/20 rule, a company needs five years of experience and 20 aircraft to become eligible for the licence. The 5/20 rule is applicable to all commercial aviation companies flying passengers, as per the Civil Aviation Ministry norms.
Airlines have been opposing the 5/20 rule stating that it has thwarted the growth of the aviation sector in India. The airlines cannot fly on any lucrative international profitable route unless they have 5 years of flying experience and 20 aircraft. Barring India, no other country has this rule.
The CBI has alleged that some officials of the Civil Aviation Ministry and the then officials of the FIPB entered into a criminal conspiracy with R Venkataraman, Tony Fernandes, and Rajender Dubey with the intent to help the AirAsia India limited to expedite the approval process in order to bring the required change in aviation policy to suit the company.
The controversies in the approvals given by the Civil Aviation Ministry and the FIPM approval by the Finance Ministry in late 2012 came to public domain after BJP leader Subramanian Swamy approached the Delhi High Court in 2013 demanding the cancellation of the approvals given to the AirAsia.
In 2016, ousted Tata Son’s chief Cyrus Mistry wrote to the Tata Sons Board that in the case of the AirAsia, ethical concerns have been raised with respect to certain transactions as well as the overall prevailing culture in the organisation. He also pointed out that a recent forensics investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore. The Enforcement Directorate is already probing this money laundering aspect.
The CBI in its FIR also alleged that the AirAsia group has violated FIPB and FDI norms by giving effective management control to a foreign entity, and making the AirAsia India limited a defacto subsidiary indirectly rather than a joint venture. The Air Asia India limited had used several persons like Deepak Talwar at the instance of Group CEO Tony Fernandes and Bo lingam in lobbying with unknown officials of the Civil Aviation Ministry.
After more than a decade of deliberation, the Ministry of Civil Aviation in 2016 replaced the 5/20 rule with a new rule that allowed airlines to fly abroad if they deploy 20 planes or 20% of capacity, whichever is higher, on local routes. The easing opened up room for the local affiliates of the AirAsia and Singapore Airlines ltd to start overseas flights sooner.
The AirAsia India, in which conglomerate Tata Sons ltd and local directors control a 51 per cent stake, has floated a tender to lease as many as 40 Airbus SE A320 jets. The airline has vowed to eliminate its annual losses this year. The AirAsia has 18 aircraft as of now.
India, the world’s fastest-growing major aviation market, has been a prime focus for the AirAsia, as an emerging middle class with enough disposable income flies for the first time. Fernandes has talked about a potential IPO for the unit, which could boost the value of the parent company by $200 million, the Crucial Perspective, a specialist in Asian transportation equities, said in January. The Air Asia operates international flights from several destinations in India to all across south-east Asia. Its domestic operations include daily flights from New Delhi, Bengaluru, Goa, Kolkata, Hyderabad and Ranchi.