SIA Tata Airline Raring To Fly

Friday, 14th February 2014 at 04:22am

In the middle of last year, Tata & Sons and Singapore Airlines formed a joint venture to set up a new airline, the second airline joint venture for Tata & Sons. Tata & Sons previously inked a joint venture with AirAsia Bhd. to launch a local subsidiary of Asia's first and largest budget carrier.

The joint venture it formed with Singapore Airlines is a full-service airline, in contrast to a joint venture it has with AirAsia Bhd. which is a low-cost airline.

Following the recently-amended aviation law, a foreign investor is limited up to 49% of the total share in a joint venture with a local investor. Thus, the Tata & Sons owns up the majority share, at 51%, in the new airline, tentatively called SIA-Tata Airline, while Singapore Airlines takes up the minority share.

The joint venture, SIA-Tata Airlines Ltd., has an initial capital of $100 million for its maiden operations including the acquisition of 20 A320 aircraft to form its initial fleet. All of the aircraft will be acquired through leasing arrangement with a global leasing firm.

Recruitment of ground and in-flight personnel is already ongoing including the pilots and flight crew for the planned launch on April.

SIA-Tata Airline Ltd. received the green signal from the Foreign Investment Promotion Board (FIPB), paving its way to go through the second and third steps before they can finally take off.

The company is yet to secure a no-objection certificate from the Ministry of Civil Aviation, after which they can proceed to the final step, the application for air operating permit from the Directorate General of Civil Aviation (DGCA).

Its issuance of no-objection certificate is only possible after its application passes the evaluation to be carried out by the home ministry.

The launch of India's youngest airline will cap their past ambitions of the Tata & Sons and Singapore Airlines in the past when both jointly tried to acquire a 40% stake in Air India. Unable to succeed with the acquisition, both companies tried to set up a new airline instead but fell by the wayside, citing political resistance and business rivalries as the culprits.

Tata Group's recent joint venture with Singapore Airlines and AirAsia Bhd. would mark its return to the aviation industry since it left the business in1953 when the government acquired his airline, Air India International. It pioneered the aviation business in India when it launched Tata Airlines in 1932.

Singapore Airlines, meanwhile, is Southeast Asia's largest airline operator having also owned the regional carrier Silkair and budget carrier, Scoot. It also holds a majority stake in another regional low-cost carrier, Tigerair.

By: Pete Lee.