Tata Group seeks aviation JV with AirAsia, Tony Fernandes says, India environment perfect
The new airline, AirAsia India, will be managed by the Malaysian company and based in the southern city of Chennai. Serving smaller cities, it will enter a fiercely a competitive Indian market that has proved challenging for AirAsia.
India's aviation industry, which has been plagued by losses due to high operating costs and fierce competition, was opened to foreign investors in September last year. Foreign carriers are now able to purchase up to 49 percent of local airlines.
No foreign airline has bought a stake in a local carrier since India relaxed its investment rules, although Abu Dhabi's Etihad Airways is in talks to buy a stake in Jet Airways .
AirAsia, through its investment arm, will own 49 percent of the new airline, with Tata Sons Ltd, the holding company of salt-to-software conglomerate Tata Group, owning 30 percent. Arun Bhatia, who owns Telestra Tradeplace, an investment firm, will hold the remainder.
Tata Sons said in a statement it will not have an operating role in the proposed new carrier.
"It's a formidable combination. It brings (together the) ... expertise of two giants," said Rajan Mehra, India head of U.S.-based private jet operator Universal Aviation and ex-head of Qatar Airways' India operations. "They will expand the market. Wherever AirAsia has gone, they have brought in new customers."
Tony Fernandes, AirAsia's chief executive,
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