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28 May 2024

Air Asia and India's Tata propose joint airline


Asia's largest low-cost carrier AirAsia on Wednesday announced plans to invest in an airline joint venture with India's giant Tata conglomerate and another investor.

"AirAsia through its investment arm has applied to the Foreign Investment Promotion Board (FIPB) seeking approval to invest 49 percent into a proposed joint venture with Tata Sons and Telestra Tradeplace," the statement said.

"Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers."

The three parties have signed an agreement and will apply to the civil aviation regulator for a flying permit, it added.

Tata Sons was not immediately available for comment.

The joint venture plans to operate from the southern Indian city of Chennai and boost connectivity between smaller towns for Indian travellers.

Currently AirAsia, through its operations based in Thailand and Malaysia, already connects Southeast Asia with some Indian cities such as Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata.

AirAsia -- seen as a pioneer of the low-cost carrier model in Asia -- has 118 aircraft and over 350 more on order.

Speculation about foreign interest in Indian carriers has been brewing since the government in September said it would allow overseas airlines to take up to 49 percent stakes in domestic operators as part of a blitz of economic reforms.

Jet Airways announced last month that it was in discussions with Abu Dhabi-based airline Etihad Airways, but no deal has been announced.

Indian carriers need money to fund expansion and cut debt after several years of losses caused by fierce price battles and rising fuel costs.

Only one of India's six main scheduled carriers -- privately held low-cost carrier IndiGo -- made a profit last year, helped by a strict business plan and punctual performance.