SIA and Tata Sons to establish new airline in India

23 Sep 2013 by Clement Huang

Singapore Airlines (SIA) and Tata Sons have issued a joint statement to announce that the two have signed a Memorandum of Understanding (MOU) and applied for permission from Foreign Investment Promotion Board (FIPB) to establish a new airline in India.

According to SIA spokesman Nicholas Ionides, India’s aviation market represents an exciting opportunity due to the rapid expansion and growth over the years. Therefore, establishing a new airline would allow SIA to tap into the country’s industry potential.

“The airline will help to stimulate market demand and provide economic benefits to India, while also providing a new growth opportunity for the SIA Group,” said Ionides.

The statement outlined that the airline will be based in New Delhi and operate under the full-service model. As per investment regulations in India, majority shares of business establishments in the country must be controlled by local companies. Therefore, Tata Sons is to own 51 per cent in the airline while SIA will have the other 49 per cent.

Tata Sons is a holding company of the Tata Group, an Indian conglomerate based in Mumbai. The group also maintains a three-way venture with Telestra Tradeplace and Air Asia for the proposed low-cost carrier, Air Asia India (see here).

Arun Bhatia, owner of Telestra Tradeplace, is reportedly unhappy with the news about Tata's new partnership with SIA, as he had no prior knowledge of it.

SIA has emphasised that the proposed joint venture with Tata is still in its early days and that it is still subjected to approval of FIPB and other regulatory bodies. However, the Singaporean flag carrier believes that this is the right time for such a move.

“With recent liberalisation, we believe the time is right for this joint venture, which will help stimulate market demand and provide economic benefits to India,” stated Ionides.

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Clement Huang

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