CBI seizes files on easing of 5/20 aviation rule; to probe senior officials

The National Democratic Alliance government’s decision to scrap the 5/20 rule, which made it easier for domestic airlines to fly abroad, is under the scanner of the Central Bureau of Investigation (CBI). The agency has seized files related to the National Civil Aviation Policy and is likely to call senior officials of the civil aviation ministry for questioning. The CBI is investigating allegations of bribery linked to easing policy norms for airlines to fly abroad.

“All files and records pertaining to the National Civil Aviation Policy have been forwarded to the CBI as per their request and presently the files are in the custody of the CBI,” Amit Ghosal, undersecretary at the Ministry of Civil Aviation, wrote in response to a query by Business Standard filed under the Right to Information Act.

Sources in the CBI said the agency would soon call senior officials of the civil aviation ministry for questioning in relation to the scam. “We have strong evidence to suspect that senior bureaucrats were bribed for the change in rule. We would soon call them for questioning,” the CBI source said. 

The agency has booked top executives of Tata Sons and AirAsia Berhad, including Chief Executive Officer (CEO) Tony Fernandes, deputy CEO Bo Lingam, and Tata Trust Managing Trustee R Venkataramanan for trying to bribe government officials for amending the 5/20 rule so that AirAsia India could become eligible to fly international from the first day. AirAsia India is a joint venture between Tata Sons and AirAsia Berhad. “During 2015-16, AirAsia remitted about Rs 122.8 million to HNR Trading, Singapore, which was utilised for paying bribe to unknown public servants of the Indian government for securing permit for operation of international scheduled air transport services,” the first information report filed by the CBI said.

The policy designed and approved by the present government in June 2016 dropped the five-year criterion from the 5/20 rule, which made it compulsory for domestic airlines to operate for five years and have 20 aircraft before they could fly abroad.

Tata group airlines AirAsia India and Vistara, which had operated for less than five years, were immediate beneficiaries of the change in rule. Older airlines like IndiGo, SpiceJet, and Jet Airways had strongly opposed the change saying it gave an unfavourable advantage to Vistara and AirAsia India.

Documents reviewed by Business Standard show that the AirAsia management was concerned about the impact of the 5/20 rule in its operations. On October 16, 2015, Mittu Chandilya, former CEO of AirAsia India, wrote to Fernandes saying  he along with his consultants have met top policymakers to lobby in favour of removing the 5/20 rule. “I have met all Cabinet ministers (a) few times now. Additionally, our consultants have met all bureaucrats. We have also made inroads into the Prime Minister’s Office and there is a lot of positive sentiment for our cause and removing 5/20,” the mail said.

However, AirAsia Berhad denied all charges and said the company ordered an internal review and found that no illegal payment was made for the purpose of lobbying. “Given Tatas’ more than 100 years track record and that of AirAsia’s reputation, we refute any inference of impropriety in obtaining these approvals. AirAsia India, as with others in the aviation industry, lobbied the Government of India to remove the 5/20 rule that inhibits competition and the development of a healthy aviation sector that ensures benefit to the Indian consumer but this was done in compliance with the law and certainly without any unlawful payments. Further, AirAsia Group Berhad has had an internal review and concluded that there has been no wrongdoing by either Tony Fernandes or Bo Lingam,” the company said.