The share price of AirAsia fell by 6% after Indian authorities said the airline was being probed over allegations it obtained international flying licences illegally.
AirAsia India, its Malaysian parent company and the airline’s part-owner Tony Fernandes are among those being investigated over claims the firm conspired with government officials to obtain the licences, authorities said.
The offices of AirAsia India were searched by police over the matter on Tuesday, the BBC reported.
AirAsia India and its parent company have denied any wrongdoing.
The Asian budget airline group joined forces with India’s Tata group to create AirAsia India in 2013, with each holding a 49% stake.
Under Indian rules, the airline should have been run by the Indian conglomerate, but a report published by India’s Central Bureau of Investigation and citing “reliable source information” has alleged that Fernandes was actually in control.
The report also accused the company of setting up a $1.8 million fund to pay lobbyists and “unknown public officials” in an attempt to get the government to drop a law that airlines could only fly internationally if they had been operating for five years and owned 20 aircraft.
That requirement to have been running for five years was scrapped in 2016, though companies still have to own 20 aircraft before flying internationally.
AirAsia India has said it hopes to meet this requirement by the end of this year.
“Mr Tony Fernandes wanted the airline venture to be able to fly internationally from day one,” the report said. “Source information has further disclosed that unknown public servants…entered into a criminal conspiracy…to expedite the approval process and change in aviation policies to suit the company.”
Air Asia India Limited director Shuval Mandal said in a statement: “Air Asia India Limited refutes any wrongdoing and is co-operating with all regulators and agencies to present the correct facts.
“In November, 2016 AAIL had initiated criminal charges against its ex-CEO and had also commenced civil proceedings for such irregularities. We hope to bring early resolution to all such issues.”