Malaysian low-cost carrier AirAsia, which has received government approval for its joint-venture airline in India, plans to launch the new airline by the end of this year pending receipt of its air operator certificate.

The new carrier, formed in partnership with the Tata Group and Arun Bhatia’s Telestra Tradeplace, “will have to submit a plan detailing the aircraft requirement, airworthiness, safety measures, maintenance, repair and overhaul facilities and, most importantly, an operations manual which shall be approved by the aviation regulator,” a Civil Aviation Ministry official says. “Once these necessary requirements are fulfilled, the Directorate General of Civil Aviation will sanction the air operating permit,” he adds.

However, the airline also must secure landing slots and parking bays at airports.

AirAsia wants to start flying with three to four aircraft and an initial investment of about $50 million.

Before the joint-venture carrier takes off, however, it could face procedural problems concerning India’s new Foreign Direct Investment (FDI) policy, says Aviation Minister Ajit Singh. The ministry has asked for clarity on the fundamental principle of the FDI rules, which allow investment in an existing Indian carrier and not a new one.

“The commerce ministry should change the rules to bring about clarity. Overall, I don’t see a problem in the AirAsia joint venture. Our ministry will see that the joint venture adheres to the laid-down rules,” Singh says, adding that he does not see any other major hurdles for the venture.

AirAsia will be the first foreign carrier to enter India’s aviation sector since the government changed its FDI rules in September last year to allow foreign carriers take up to a 49% stake in domestic airlines.

The proposed joint venture will operate from Chennai in Southern India and will focus on providing domestic connectivity to Tier 2 and Tier 3 cities.

Like Indian carriers, the new airline must complete five years of domestic operations before becoming eligible for overseas flights.

The Tata Group will hold 30% in the joint venture, while Telestra Tradeplace will have a 21% stake. The remaining 49% will be owned by AirAsia.

Ratan Tata, chairman emeritus of Tata Sons, said India’s approval of the airline project “reflects the true investor-friendly policies of the government. This and other similar actions will, without doubt, reinforce investor confidence in India.”

A320neo photo: AirAsia