Airasia's Turbulent Flight Path

The CBI and ED are probing possible illegalities in the manner in which the carrier secured its Indian licence. Whatever the outcome, one thing is certain: The airline has lost its sheen.

- Purba Das and Debabrata Das

OVER THE PAST 150 YEARS, THE HOUSE OF TATA HAS BUILT A PRISTINE REPUTATION OF DOING BUSINESS THE ETHICAL WAY AND LARGELY STAYING AWAY FROM THE MURKY ACTIVITIES WHICH OFTEN DEFINE THE FUNCTIONING OF CORPORATE INDIA. THAT REPUTATION IS NOW AT STAKE AS THE GOINGS-ON AT AIRASIA INDIA, ITS FIRST VENTURE IN THE CIVIL AVIATION SECTOR SINCE THE DAYS OF J.R.D. TATA, HAVE COME UNDER THE SCRUTINY OF INDIA’S TOP LAW ENFORCEMENT AGENCIES.

Turbulence for the carrier began in May this year when the Central Bureau of Investigation (CBI) registered a first information report (FIR) against Malaysia-based AirAsia Group chief Tony Fernandes for alleged bribery to obtain flying licences and changing regulations. The agency also filed a case against R. Venkataramanan, managing trustee of Tata Trusts; Tharumalingam Kanagalingam, better known as Bo Lingam, deputy group CEO (operations), AirAsia; HNR Trading’s Rajender Dubey; lobbyist Deepak Talwar, and Travel Food Services chairman Sunil Kapur.

The CBI in its FIR, which has been reviewed by Fortune India, also alleged that Lingam and Kapur bribed government officials to remove the 5/20 rule. Under this rule, the ministry of civil aviation stipulated that a domestic airline needed a minimum of five years of operational experience and a fleet of at least 20 aircraft before it could be allowed to fly to international destinations. It was replaced in 2016 with a new norm that scrapped the five-year waiting time.

Soon after the CBI filed its FIR, the Enforcement Directorate (ED) filed a case of money laundering against AirAsia India officials. Both AirAsia Group Berhad and Tata Trusts have refuted the charges and backed their men. AirAsia Group Berhad, the parent company of the airline group, is the largest low-cost service provider in Southeast Asia by fleet size and destinations.