Singapore Air-Tata venture orders 20 Airbus A320s for $1.8 billion

The Tata Group-Singapore Airlines joint venture full-service carrier has decided to lease 20 Airbus A320 aircraft in a deal estimated to be around $1.8 billion, as it aims to start operations in the second half of this year.

The Tata Group-Singapore Airlines (SIA) joint venture full-service carrier has decided to lease 20 Airbus A320 aircraft in a deal estimated to be around $1.8 billion (Rs 11,358 crore), as it aims to start operations in the second half of this year. The companies have declined to give an official deal value.

Tata-SIA, which applied to the aviation ministry for a no-objection certificate in late December, has received approval from the Foreign Investment Promotion Board to start a passenger airline in India.

“The planes are being leased from a Singapore-based leasing company and are brand new,” Sanjay Singh, a senior Tata-SIA executive, told HT. “The decision to lease Airbus aircraft for the new airline was taken jointly by Tata-SIA in Mumbai,” said Singh.

On why the venture chose Airbus over US plane-maker Boeing, Singh said, “It just made better commercial sense and we are very happy with the decision.”

The delivery of the planes will start around June – the same time when Tata-SIA plans to begin operations.

“I expect a bigger order from Tata-SIA after it receives regulatory clearances. Tata-SIA is a game-changing project and is critical towards long overdue corporatisation of the sector,” said Kapil Kaul, South Asia CEO of Centre for Asia Pacific Aviation.

Tata-SIA would jointly invest $100 million initially to set up the airline with Tata’s investing $51 million. Tata Sons will own 51% and Singapore Airlines will own 49% in the joint venture.

The Tata Group has also inked an agreement to set up a low-cost carrier in joint venture with Malaysia’s AirAsia.