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Tata Set To Fly With AirAsia in JV

FEBRUARY 21, 2013

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AirAsia, a Malaysian low-cost carrier, has sought government approval for an airline in India in partnership with Tata and Telestra Tradeplace.

The joint venture will be the Tatas' second entry in aviation after the late JRD Tata had launched Tata Airlines in 1932, which was later nationalised to form Air India. Earlier, a decade back, the Tatas had joined hands with Singapore Airlines to bid for a stake in Air India. However, it could not materialise as the government abandoned its disinvestment plans due to opposition.



AirAsia, through its investment arm AirAsia Investment Ltd seeks to own 49 % stake in the new airline with Tata Sons expected to own 30 % and Telestar the rest 21 %. The venture plans to operate from Chennai on domestic routes.



The new carrier will focus on domestic connectivity to tier-II and tier-III cities. Currently, AirAsia flies from Malaysia and Thailand to Chennai, Bangalore, Kochi, Tiruchirappalli and Kolkata. AirAsia X, its long-distance arm, had stopped its flights to India last year due to poor demand and profitability.



Within 11 years, AirAsia has become the largest no-frills Asian airline with 118 aircraft and over 350 on order. The Indian aviation sector, suffering losses due to high operating costs and regulatory uncertainty, was thrown open to foreign investors last year.



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