AirAsia, Tata's new airline likely to fly from this year-end

A new airline, to be launched by AirAsia, Tata Group and an Indian investor, may start flying from this year-end with 3-4 planes and an initial investment of about $50 million by the Malaysian budget carrier.

Taking the aviation sector by surprise, the Malaysian carrier had yesterday announced that a joint venture it has set up with Tata Sons and Arun Bhatia of Telestra Tradeplace has already applied to the Foreign Investment Promotion Board (FIPB) to seek approval for acquiring 49% in the proposed airline company.

AirAsia CEO Tony Fernandes today said his company would initially invest between $30-50 million in the proposed airline that would launch operations with three to four Airbus A-320 aircraft. "We will scale up (the fleet) quickly thereafter."

Of the 51% stake, Tata Sons is likely to pick up 30% equity and one of Bhatia's companies, Hindustan Aerosystems, the remaining 21%.

The airline would be based in Chennai and in the initial phase concentrate on destinations in South India where AirAsia already operates, Fernandes said in a global teleconference from Malaysia.

Asked by when the new airline would take to the sky, Fernandes said, "It is in the hands of the Indian regulator ... But most likely it will start by the fourth quarter" of this year or the winter season.

The airline would be based in Chennai and in the initial phase concentrate on destinations in South India where AirAsia already operates, he said.

Maintaining that the new airline's CEO would be named in the next few weeks and the senior management soon thereafter, he said the proposed airline's Board would have Indians in a majority.

"Initially we will have a staff strength of about 300 people. But as we grow, we will add to the number. As a thumb rule, generally 20 people are employed with every new aircraft added to the fleet," he said.