New Indian Carrier to Commence Operations Next Year

Thursday, 21st November 2013 at 10:36am

The new airline, christened SIA Airlines, is a joint venture between Tata Group of India and Singapore Airlines, consistently voted as the world's best airline.

The partnership is the second of its kind for Tata Group who have earlier inked partnership with another airline giant, AirAsia Bhd. of Malaysia, to set up a local affiliate of its highly successful budget carrier in the subcontinent.

SIA Airlines is majority owned by Tata Group, at 51%, as is legally allowed in India, while the remaining 49% is held by Singapore Airlines Ltd.

The news on the rumored joint venture broke out just last month when Singapore Airlines announced to the media its foray into the Indian market with Tata Group as its partner.

The partnership stirred controversy as Tata Group also has a joint venture with AirAsia Bhd. for a similar business. Tata Group's local co-owners of AirAsia India reportedly claimed the SIA-Tata Group joint venture is unethical as it will create conflict of interest in the part of Tata Group.

However, Tata officials was quick to defend its action saying the latest venture is planned to be a full-service airline and won't compete directly with AirAsia India, which is a budget carrier.

The investors are awaiting approval of their application for a permit to operate from the country's aviation regulatory authorities after the Foreign Investment Promotion Board gave them the green signal on the joint venture early this month. In particular, the newly-formed airline is required to secure a 'no-objection certificate' from the Indian government before it can start operations.

Tata Group and Singapore Airlines Ltd. put up an initial capital of $100 million to set up SIA Airlines. The new joint venture effectively becomes the third such investment after the government relaxed its FDI policy in aviation business.

Earlier this year, AirAsia India in which Tata is also part owner, secured its license to fly from the government. It was followed by Etihad Airways' purchase of a substantial stake in Jet Airways in the middle of this year.

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