More than 17 years after it made an abortive attempt to re-enter the domestic airline industry, the Tata Group — the biggest business house in India — is seeking to make another attempt by starting a low-cost airline with Malaysia-based AirAsia.
AirAsia, the largest low-cost carrier in Asia in terms of fleet size — 118 aircraft — and a route network covering more than 20 countries, said on Wednesday that it had signed an agreement with Tata Sons Ltd and Arun Bhatia of Telestra Tradeplace Pvt Ltd to set up a no-frills airline in India.
“We have carefully evaluated the developments in India over the past few years and strongly believe the current environment is perfect to introduce AirAsia’s low fares, which stimulate travel and help the market grow,” AirAsia’s founder and group CEO Tony Fernandes said.
The joint venture plans to operate from Chennai and focus on connecting Tier 2 and 3 cities. Currently, AirAsia connects Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata with the Asean countries.
The move follows the September 2012 decision of the government to allow foreign airlines to invest in domestic carriers. “Subject to FIPB approval, the proposed joint venture company will make an application to Indian aviation regulators for an air operator’s permit,” an AirAsia statement said.
It said the airline, through its investment arm, AirAsia Investment Ltd, sought clearance from the Foreign Investment Promotion Board for taking a 49% stake in the joint venture with Tata Sons. While the Tatas will hold 30% in the venture, the rest will be held by Bhatia.
A spokesperson for the Tata Group, which had to exit the domestic aviation sector in 1953 following the nationalisation of Air India, said, "The airline will be managed by AirAsia and Tata Sons will not have any operational role." Sources said Telestra Tradeplace would not have any representation on the board, as it was only an investor.
PTI reported quoting Wikipedia that Bhatia's son, Amit, and Fernandes are on the board of Queens Park Rangers Football Club in the UK. Amit is married to the only daughter of steel tycoon Lakshmi Mittal, Vanisha. But HT couldn't independently confirm this.