NEW DELHI, May 29 — Tan Sri Tony Fernandes, the chief of AirAsia Group Bhd, is being investigated by the Indian federal police for allegedly paying bribes to influence local policy, an Indian official told reporters.

India’s Central Bureau of Investigation has named Fernandes and other officials from AirAsia Bhd and its Indian unit in its investigation, the official told reporters today in New Delhi, asking not to be identified citing rules.

The probe is a setback to AirAsia’s expansion, with its India unit planning more domestic flights and a January start to international operations. Fernandes has identified India as one of the main pillars of his pan-Asian dream as he seeks to capture a share of a market dominated by Gulf-based carriers and the national carrier Air India.

The charges laid out by the CBI allege Fernandes and others bribed Indian officials through middlemen to influence policies, including obtaining a flying permit and approvals to fly internationally, the official said.

AirAsia India denied any wrongdoing and is cooperating with authorities, Shuva Mandal, the unit’s director, said in an emailed statement. The company began criminal and civil proceedings against a former chief executive officer in 2016 and hopes to bring an "early resolution to all such issues,” Mandal said.

Service restrictions

After more than a decade of deliberation, India in 2016 scrapped a restrictive rule that only granted international licenses to carriers with five years of domestic operations and a minimum of 20 aircraft in their fleet. The new rules allow airlines to fly abroad if they deploy 20 planes or 20 per cent of capacity, whichever is higher, on local routes. The easing opened up room for the local affiliates of AirAsia and Singapore Airlines Ltd to start overseas flights sooner.

AirAsia India, in which conglomerate Tata Sons Ltd and local directors control a 51 per cent stake, has floated a tender to lease as many as 40 Airbus SE A320 jets. The airline has vowed to eliminate its annual losses this year.

Fernandes has established affiliates over the years in Indonesia, Thailand, India, Japan and Vietnam, trying to take advantage of world-beating traffic growth in the region. AirAsia has ordered hundreds of planes worth billions of dollars from Airbus SE to meet its expansion plans and is in the process of selling a plane-leasing unit to raise more cash.

India, the world’s fastest-growing major aviation market, has been a prime focus for AirAsia, as an emerging middle class with enough disposable income flies for the first time. Fernandes has talked about a potential IPO for the unit, which could boost the value of the parent company by US$200 million (RM797.3 million), Crucial Perspective, a specialist in Asian transportation equities, said in January. — Bloomberg