SIA, Tata to start airline in India
SINGAPORE: Singapore Airlines Ltd (SIA) tied up with Tata Group, owner of the Jaguar and Land Rover brands, to start an airline in India, its third attempt to tap the surging travel demand in the world's second-most populous nation.
Tata will hold 51 per cent of the venture and SIA, the remainder, the airline said. Both firms entered into an initial agreement for a US$100 million (RM316 million) investment and are seeking government approval to set up the full-service carrier, to be based in New Delhi.
Entering India will enable SIA to get a foothold in a market where the number of air passengers is forecast to triple to 452 million by 2020. Asia's third-largest economy last year permitted foreign airlines to buy stakes in local airlines, a move that brought in investments from budget-carrier AirAsia Bhd and Abu Dhabi's Etihad Airways PJSC.
AirAsia chose Tata. Tata Sons Ltd, the holding firm for the group, owns 30 per cent in the new discount carrier, which is awaiting final approv-als to start operations later this year.
Entering India is not without risks. Airlines have to confront the region's highest fuel costs, a depreciating currency and the lack of adequate infrastructure.
Tata doesn't see a conflict of interest in partnering with SIA for a full-service airline and AirAsia for a budget carrier, said Mukund Rajan, a group spokesman. The US$100 billion conglomerate has businesses ranging from cars, hotels, steel and software. Bloomberg