With AirAsia, Tata Sons deal buzzing in Indian air, Ratan Tata meets Ajit Singh

Written by PTI | New Delhi | Updated: Mar 2 2013, 02:06am hrs
Ratan TataWith AirAsia, Tata Sons deal buzzing in Indian air, Ratan Tata meets Ajit Singh (Reuters)
Ratan Tata, chairman emeritus of Tata Sons, today met Civil Aviation Minister Ajit Singh here, days after Malaysian carrier Air Asia's Tony Fernandes announced it had sought government's nod to launch a new airline under a joint venture with Tata Sons and an Indian investor.

Though there was no official word on what transpired at the meeting this afternoon, it is understood that the plans for the launch of the airline came up during the discussions.

The meeting came days after the Malaysian budget carrier's CEO Tony Fernandes said the new airline may take to the sky by this year-end with 3-4 Airbus A-320 and his company would make an initial investment of between USD 30-50 million.

Besides AirAsia Investment and Tata Sons, the other investor in the joint venture is Arun Bhatia of Telestra Tradeplace.

An application has already been moved by Air Asia's investment arm, AirAsia Investment Limited (AAIL) before the Foreign Investment Promotion Board (FIPB) to seek approval for acquiring 49 per cent equity in the airline company.

Of the remaining stake, Tata Sons is likely to pick up 30 per cent and one of Bhatia's companies, Hindustan Aerosystems, 21 per cent.

After the FIPB approval, the joint venture company would make an application to the aviation regulator DGCA for the Air Operators Permit to carry out flying operations.

Fernandes recently said the new airline would be based in Chennai and in the initial phase concentrate on destinations in South India where Air Asia already operates. It would also focus on providing connectivity to Tier-II and III cities.

Asked by when the new airline would start operations, Fernandes had said "it is in the hands of the Indian regulator ... but most likely it will start by the fourth quarter" of this year or the winter season.

He had also said that the airline's CEO would be named in the next few weeks and the senior management soon thereafter.

The proposed airline's Board would have Indians in a majority.

For the USD 100 billion-Tata Group, this would be its second foray into the aviation segment after the late JRD Tata launched Air India before Independence.

AAIL, Tata Sons and Hindustan Aerosystems, owned by Bhatia, would infuse USD nine million within a fortnight of the Foreign Investment Promotion Board (FIPB) clearance to set up the joint venture.

The FIPB is likely to taken Air Asia's application for the joint venture on March 6.

The three parties would infuse another USD 21 million within 45 days of receiving a no-objection certificate from the Directorate General of Civil Aviation (DGCA).

It is understood that the new airline's board would have six members.

Air Asia, being the largest investor (49 per cent), would have two members on the board, including Fernandes. Tata Sons would also have two members. While Arun Bhatia would be the fifth, the sixth one would be an Indian national who is likely to be appointed as a non-executive chairman.