AirAsia CEO Tony Fernandes has failed to turn up for questioning in India before the country’s Directorate of Enforcement to address allegations of the Malaysian LCC’s attempt to manipulate government policies in contravention of the Prevention of Money Laundering and the Foreign Exchange Management Act.
The directorate filed criminal money laundering charges against several AirAsia officials in May 2018 for allegedly for trying to manipulate government policies to get an international flight license for its AirAsia India venture.
Scheduled to appear on Monday, Fernandes faces arrest and unspecified penalties if found culpable. The situation appears likely to affect AirAsia India’s expansion plans and those of parent AirAsia, which presently operates 1,035 flights every week to India. The airline had expressed an interest to fly to Kuala Lumpur and Bangkok as its initial destinations but will likely face further delays as the case drags on. Attempts by AIN to contact senior officials of the airline proved unsuccessful.
Flying a fleet of 29 A320s, AirAsia India operates as a joint venture between majority owner Tata Sons and AirAsia Malaysia. It runs more than 175 daily flights to over 20 domestic destinations and has awaited permission to fly internationally since last year, around the time Indian authorities filed the case.
Recently, when Malaysia lambasted India for stripping the special status of the state of Kashmir under Article 370, the subcontinent—Malaysia’s largest edible oil buyer—halted palm oil imports from the Southeast Asian company. “India is using its large trade partner status to get standing on the world stage,” Vishok Mansingh, CEO of Mumbai-based Vhan Aero Services, told AIN. “This clearly shows it means business, something that is likely to reflect on the aviation scene [to the detriment of Malaysia],” said
Uncertainty also surrounds Tata’s aspirations to play a larger role in the Indian aviation market, including its ambition to buy Air India. Tata also holds a 51 percent stake alongside Singapore Airlines in Indian full-service carrier Vistara. “If Tata Sons decides to look at buying Air India, it is not clear how thin it would like to spread its mantle,” said an airline official. “[Maintaining a stake in three airlines] would be a bit much. It is likely AirAsia India could be merged with the two carriers.”
Plans call for the release of a second expression of interest for Air India next week.