Tata Sons-Singapore Airlines JV reaches second stage, applies to civil aviation ministry for NOC

Written by ENS Economic Bureau | New Delhi | Updated: Dec 28 2013, 14:59pm hrs
The airline joint venture between the Tata Group and Singapore Airlines (SIA) has reached its second stage with the company applying for a No-Objection Certificate (NOC) to the civil aviation ministry on Thursday.

We have received their proposal seeking an initial NOC for the airline venture. We will send names of all board members to the home ministry for security clearances and go through the proposal, said a senior civil aviation ministry official.

The members on the board are Prasad Menon, also the chairman of the company, and Mukund Rajan, both nominated by Tata Sons, the third, Mak Swee Wah, is the initial director nominated by Singapore Airlines.

Tata Sons will be the majority partner in the airline venture with 51 per cent stake, while SIA will hold 49 per cent. The two companies plan to set up the airline with an initial investment of $100 million.

With the application for NOC, Tata-SIA proposal has reached second stage. Once received, the process will reach its final stage and the company will have to apply to the Directorate General of Civil Aviation (DGCA) for Air Operators Permit.

The civil aviation ministry, in the recent past, has been quick with clearances and the proposals will now be overlooked by the new aviation secretary Ashok Lavasa, who joins on January 1, 2014.

The Tata-SIA proposal got the clearance of the Foreign Investment Promotion Board in October making it eligible to apply for the NOC.

According to the MoU inked between Tata Sons and SIA,the joint venture company will be incorporated in New Delhi and its principal place of business shall be India at all times.

In the proposal, the joint venture company had assured the government that control of the company would always remain in Indian hands. It has also said in the proposal that the Indian subsidiary of SIA will get access to SIAs international network.

Currently, the government rules do not allow domestic airlines less than five years in operations and with a fleet of less than 20 aircraft to commence international operations. The ministry of civil aviation is drafting a Cabinet note to amend the policy.

With this proposal, the aviation sector in India has seen entry of a third foreign carrier and bringing in equity investments of over Rs 2,800 crore since the time foreign direct investment rules were relaxed in September 2012.