ZCZC
BCN-27
MALAYSIA-INDIA-AVIATION-AIRASIA
AirAsia shares hit as India probes Fernandes
KUALA LUMPUR, May 30, 2018 (BSS/AFP) – Shares of budget carrier AirAsia
fell to a six-month low Wednesday after Indian authorities raided the
airline’s local offices and accused its boss Tony Fernandes of illegally
obtaining operating licences.
The Central Bureau of Investigation said Tuesday it was probing
allegations that Fernandes illicitly lobbied Indian officials for favourable
treatment for his Malaysian-based carrier.
Officers raided AirAsia offices in major Indian cities as part of its
investigation. AirAsia has denied any wrongdoing.
The carrier’s shares fell as much as 6.3 percent to 3.10 ringgit (78
cents) in Kuala Lumpur, their lowest level since late November, before edging
back up.
The investigation is a blow in a market that AirAsia had singled out as a
major destination to expand.
Corrine Png, CEO of Asian transport equity consultancy Crucial
Perspective, told AFP investors might be concerned as “investigations are
likely to impede” plans by AirAsia India to expand out of the domestic market
next year.
“International flights will be more lucrative for AirAsia India than
domestic operations where competition is stiff.”
But she also noted that the impact on AirAsia as a whole was likely to be
minor as the India branch was only a small part of the company.
Fernandes was accused by investigators of campaigning to have aviation
regulations relaxed in his favour, the Press Trust of India news agency
reported.
One of these was the so-called 5/20 rule stipulating that companies must
have five years of domestic experience and a fleet of 20 aircraft before
being eligible to operate abroad.
Besides Fernandes, investigators also named an AirAsia director, an
aviation consultant and unidentified Indian government officials in its
preliminary case, PTI reported.
AirAsia and its local joint venture partner Tata Sons launched domestic
flight operations in India in 2014 by offering eye-catching promotional fares
to lure budget travellers.
Fernandes, a millionaire ex-music executive, has styled himself as Asia’s
answer to British tycoon Richard Branson.
The company ran into trouble this month when Air Asia India’s CEO Amar
Abrol stepped down, citing personal reasons.
BSS/AFP/HR/1150