Tata collaborates with Singapore airlines to launch a full service airline in India

Published: September 20th, 2013,12:17

Tata Sons and Singapore Airlines have entered into a pact to set up a new full-service airline in India and have applied for FIPB approval, said Tata Sons in a press release. The two will jointly invest $100 million to set up the full-service airline.

Tata Sons will own 51% stake and Singapore Airlines will own 49%, the press release said. Commenting on the joint venture, civil aviation minister Ajit Singh said that the Tatas had informed him this morning that they will be applying for an FIPB approval. “We have to wait for FIPB’s response on the new JV,” Singh added. He also clarified that aviation rules do not bar companies from starting two airlines.

However, the pact will require approval from market regulator Sebi and the corporate affairs ministry. Tata Sons has maintained that the new full service carrier will not compete with Air Asia India, which is being established as a low-cost airline. Sources told CNBC- TV18, the Tata-SIA deal have been in the works for a few months, but the talks picked up after FIPB cleared the AirAsia deal. The sources also confirmed that there was no conflict of interest with AirAsia in terms of ’conceptually’ .

The initial board will comprise of three members, two of which will be nominated by Tata Sons and one by Singapore Airlines. “Government must all both the joint ventures to be formed. However, the regulatory uncertainty is a reality,” said Kapil Kaul, CEO , South Asia, Centre for Asia Pacific Aviation (Capa), an aviation consultancy firm. Tata Son’s nominee Prasad Menon will be the chairman of the new airline
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Published: September 20th, 2013,12:17

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