'AirAsia stake not a hurdle for Tata Sons JV with Singapore Airlines'

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If the documents are in order, I do not see Tata, Singapore Airlines facing hurdles in obtaining a flying licence: DGCA official Reuters photo If the documents are in order, I do not see Tata, Singapore Airlines facing hurdles in obtaining a flying licence: DGCA official Reuters photo
SummaryTata Sons’ investment in AirAsia India is unlikely to cause a problem for the group's latest JV.

Tata Sons' investment in AirAsia India is unlikely to cause a problem for the group's latest joint venture with Singapore Airlines in obtaining a flying licence, sources in Directorate General of Civil Aviation (DGCA) indicated on Monday.

“As long as the two airlines don't have the same board members and management team and the synergies in operations and maintenance are carried out under a proper commercial contracts, there should be no problem,” said a senior DGCA official. “It's not the first time that the same promoter will hold two airline licences. Naresh Goyal's Jet Airways hold's one licence under airline code 9W while its wholly owned subsidiary

Jet Lite holds the licence under code S2.”

“The question of monopolising competition also doesn't come into play as these will be two new airlines,” the official added. “If the documents are in order, I do not see Tata-Singapore Airlines facing any major hurdles in obtaining a flying licence.”

Last week, Tata Sons' announced that it will launch a new full service airline in partnership with Singapore Airlines. The airline will be in addition to its tripartite joint venture for a low-cost airline with AirAsia and Arun Bhatia.

The difference between the two ventures is that Tatas have a minority 30% holding in AirAsia India, while, in the venture with SIA, it will be the majority shareholder with 51% holding.

AirAsia India, late last week, received a no-objection certificate from the aviation ministry. It will now apply for a flying licence to the DGCA and expects to launch operations from end of this year. The Tata-Singapore Airlines venture will first need the FIPB approval before it applies for an NOC from the aviation ministry and subsequently a flying permit.

The initial board members nominated by Tatas for the two ventures are distinct. While Tatas will be represented on the AirAsia board by Bharat Vasani, R Venkatramanan and S Ramadorai, the Singapore Airlines joint venture will have Mukund Rajan and Prasad Menon from the Tata Group.

As previously reported, in AirAsia India, the operational expertise will come from AirAsia, while Tatas would play largely an investor role. In the Singapore Airlines venture, Tata Sons said that it will take the pilot seat in the operations of the airline.

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