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AirAsia denies allegations of wrongdoing in India

Budget airline's Indian unit accused of bribery and violating investment rules

AirAsia Group CEO Tony Fernandes during a 2014 news conference. The outspoken executive on Wednesday dismissed allegations of wrongdoing by the group's Indian unit.   © AP

KUALA LUMPUR -- AirAsia has denied allegations that its Indian unit violated foreign investment rules and offered inducements to secure an international operating license. 

Shuva Mandal, a director of AirAsia India, said in a statement that the budget carrier's unit is cooperating with "all regulators and agencies to present the correct facts." 

The New Delhi police began an investigation on Monday after charges based on "source information" were filed against AirAsia India, its Malaysian shareholder AirAsia, travel agents, and directors, including AirAsia Group CEO Tony Fernandes.

The 10-page charge sheet viewed by the Nikkei Asian Review alleges "criminal conspiracy and criminal misconduct" that took place between 2013 and 2016.

According to the charges, AirAsia had made the Indian unit a "de facto subsidiary" by entering into a "Brand License Agreement" with it in 2013, suggesting that the Kuala Lumpur-based group has management control.

AirAsia India is a joint venture between AirAsia and Tata Sons, each with a 49% stake. The remaining 2% is held by two Indian nationals. India's foreign direct investment policy allows foreign shareholding of up to 49%, but the local partner must control management. 

The charges also claim that Fernandes and his Indian partners paid government officials through nominees to remove a regulation that allows carriers to fly international routes. Known as the "5/20 rule," the regulation stipulates that airlines must operate in the domestic sector for five years and own at least 20 aircraft before applying for a license to fly overseas.

AirAsia India's fleet numbered only 16 aircraft at the end of March, but Fernandes had said he intended to expand it so he could take the airline international, even though other AirAsia subsidiaries are already servicing Indian destinations.

The Indian carrier appears to be deflecting the blame for any irregularities onto its ex-CEO, saying it had begun civil proceedings in Bangalore.

In a Wednesday tweet, Fernandes dismissed the allegations, which first appeared in Indian media outlets. "Sometimes wonder about certain media [that] just wrote anything without checking any facts. Seriously wild stuff which [is] just plain wrong and inaccurate," he wrote.

Shares of AirAsia ended 6.95% lower to 3.08 ringgit ($0.77) on Wednesday, while the benchmark FBM KLCI Bursa Malaysia finished 3.18% lower.

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