AirAsia takes Tatas back to skies in three-way JV for budget airline
As per the arrangement, Tata Sons will pick up 30% stake in the joint venture while Arun Bhatia, who runs aircraft component maker Hindustan Aerosystems, will own 21%.
“When AirAsia approached Tata Sons with the proposal for a stake in the venture, we concluded that given its reputed business model, AirAsia could be a relevant and successful service provider in the domestic sector,” a Tata Group spokesperson said. “The benefits to the domestic market will include AirAsia’s reputed service, which will further grow aviation as a mode of transport in what is a relatively under served market and employment generation.”
In mid-1990s, Tatas had tried to launch an airline with Singapore Airlines but the plan failed to materialise because of regulatory hurdles.
The proposed airline will be a low-cost carrier. Sources said AirAsia would be putting in place an Indian management team to handle the operations of the Indian airline.
“The joint venture plans to operate from Chennai focussed on providing domestic Tier II/Tier III city connectivity to Indian travelers,” AirAsia said.
AirAsia's announcement comes after it had denied showing an interest in buying a stake in low-cost carrier SpiceJet. The airline's billionaire boss Tony Fernandes had visited India in late 2012. The low-cost carrier had been looking for the right partner to enter India even as it kept maintaining that market conditions were not right for