In the first announcement since the FDI policy for aviation was liberalised, Malaysian carrier AirAsia on Wednesday said it has sought government's nod to launch a new Indian airline and has set up a joint venture with Tata Group, as well as an investment firm for the purpose.
The
budget carrier AirAsia Berhad said its investment arm AirAsia Investment (AAIL) "has submitted an application to the Foreign Investment Promotion Board (FIPB) to seek approval for AAIL to invest 49 per cent in a proposed joint venture with Tata Sons and Arun Bhatia of Telestra Tradeplace".
The news comes two months after Air Asia denied it was bidding for a stake in no-frills carrier SpiceJet.
"Subject to FIPB approval, the proposed joint venture company will make an application to Indian aviation regulators for the Air Operators Permit," the Malaysian carrier said in a statement from its headquarters in Sepang.
The joint venture plans to operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, it said.
AirAsia, through its operations based in Thailand and Malaysia, flies to Chennai, Bangalore, Kochi, Tiruchirappalli and Kolkata from several destinations in the ASEAN region.
While AirAsia will hold 49 per cent stake in the JV, the Tata Group will hold 30 per cent and Hindustan Aviation of the Bhatias - 21 per cent, said sources, requesting anonymity.
The three parties signed the partnership agreement and submitted the proposal to the Indian government earlier this week, they said.
"We have carefully evaluated developments in India over the past few years and strongly believe that the current environment is perfect to introduce AirAsia's low fares which stimulate travel and grow the market," AirAsia founder and Group Chief Executive
Tony Fernandes said in the statement.
It was in September last year that the government decided to open up the aviation sector to Foreign Direct Investment from foreign carriers.
AirAsia has made the move to invest even as Etihad and Jet Airways continue to work towards finalising a deal for the Gulf carrier to invest in Jet.
For the $100 billion Tata Group, this would be its second foray into the aviation segment after the late JRD Tata launched Air India before the Independence.
Ratan Tata, Chairman Emeritus of the Tata Group, once pioneers in civil aviation, had indicated
in an interview days before he retired as chairman last year that the conglomerate was unlikely to enter into the sector because of "destructive competition".
The Bombay House could not be contacted immediately for a reaction on the AirAsia announcement.
The Tata Group holds nearly 6 per cent equity in SpiceJet, but has maintained that it was only a financial investor in the budget carrier.
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