Tata Group back in airline biz with Air Asia JV

Air Asia to hold 49%, rest to be held by Tatas and Arun Bhatia of Telestra Tradeplace Pvt Ltd

Over two decades after its plans to start a joint venture airline with Singapore Airlines got scuttled the Tata Group is set to venture into airline business once again. On Wedneday Asia largest low cost airline Air Asia announced that it submitted  has submitted an application to the Indian Foreign Investment Promotion Board (“FIPB”) to seek approval for AAIL to invest 49% into a proposed Indian joint venture together with Tata Sons Limited and Arun Bhatia of Telestra Tradeplace Pvt. Ltd.. This move comes amidst the backdrop of the September 2012 decision by the Government of India to open up the aviation sector to Foreign Direct Investment from foreign carriers.
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Subject to FIPB approval, the proposed joint venture company will make an application to Indian aviation regulators for the air operators permit. The parties have signed a Memorandum of Agreement that details high-level terms with regards to the proposed partnership.

As a pioneer of the low cost carrier (“LCC”) model in Asia and currently Asia’s largest LCC with 118 aircraft and over 350 orders, AirAsia believes Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers. The joint venture plans to operate from Chennai, Tamil Nadu focused on providing domestic Tier II/Tier III city connectivity to Indian travelers. Currently, AirAsia through its operations based in Thailand and Malaysia already connect Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN.