AirAsia Subject of Corruption Probe in India

Neelam Mathews
May 29, 2018

India’s Central Bureau of Investigation registered a case on Tuesday against more than ten major officials of AirAsia Group in India, Malaysia, and Singapore, who, according to authorities, collaborated with civil aviation officials to “expedite the approval process and change aviation policies to suit the company.” The officials allegedly had lobbied for speedy clearances, removal of existing rules, and changes in regulatory policies to benefit startup domestic carrier AirAsia India.

The case report viewed by AIN characterized the actions by the airline group as a “criminal conduct.” The report also specifically named AirAsia Group CEO Tony Fernandes. Authorities on Tuesday conducted simultaneous raids at five offices of AirAsia India, which, according to a CBI statement, “led to recovery of certain documents” into which an investigation continues.

The CBI said the “criminal conspiracy” amounted to an attempt to amend/remove the then existing “5/20 rule” in 2013 that restricted startups domestic flying for at least five years with a minimum of 20 aircraft before flying international routes. Regulators amended the rule by removing the five-year caveat while retaining the required minimum of 20 aircraft.

The CBI report refers to lobbying agents who won contracts from AirAsia for favors as a quid pro quo. “Information has further revealed that indirectly the entire operation of AirAsia lndia was controlled by [parent company] AirAsia Berhad, by overriding the Board of Directors of AirAsia lndia,” note the report. A so-called brand license agreement allegedly resulted in day-to-day control by AirAsia Group of Malaysia over AirAsia lndia, which at the time violated guidelines of India’s Foreign Investment Promotion Board.

CBI serves as India’s premier investigating agency. It has evolved from an anti-corruption agency to a multi-faceted, central police law enforcement agency with a legal mandate to investigate and prosecute offenses anywhere in India.

AirAsia India operates as a joint venture between Tata Sons and Malaysia-based AirAsia, with a small stake held by two individuals. A statement from Shuva Mandal, director of AirAsia India, denied any wrongdoing by the company and noted its cooperation with all regulators and agencies to present the “correct facts.”