Tatas and Singapore Airlines to form new airline in India

Taking advantage of India’s recent liberalisation of the aviation sector, the country’s most famous conglomerate, Tata Sons, and flag carrier Singapore Airlines (SIA) have signed a memorandum of understanding and applied for Foreign Investment Promotion Board (FIPB) approval to establish a new airline in India, thus adding a well financed full service carrier with strong customer service roots.

The airline will be based in New Delhi and will operate under the full-service model. Tata Sons will own 51 percent and Singapore Airlines will own 49 percent.

The announcement brings full circle, a partnership first commenced by the two companies back in 1995, when they jointly attempted to start an airline in India. In 2000, the two jointly bid for a stake in Air India. At the time the bids were thwarted by a sudden shift in policy, some say politically pushed through by a then fledgling Jet Airways, preventing investment in Indian carriers by a foreign airline.

The initial board will have three members, two nominated by Tata Sons and one nominated by Singapore Airlines. The chairman will be Prasad Menon, nominated by Tata Sons. Mukand Rajan, member of the group executive council of Tata Sons will be the ther director while Mak Swee Wah, executive vice-president (commercial) will represent Singapore Airlines.

Menon said

“It is Tata Sons’ evaluation that civil aviation in India offers sustainable growth potential. We now have the opportunity to launch a world-class, full-service airline in India. We are delighted that we are partnering in this endeavour with the world-renowned Singapore Airlines,”

Singapore Airlines CEO, Goh Choon Phong, added

“We have always been a strong believer in the growth potential of India’s aviation sector and are excited about the opportunity to partner Tata Sons in contributing to the future expansion of the market.” “Tata Sons is one of the most established and respected names in India. With the recent liberalisation, the time is right to jointly bring consumers a fresh new option for full-service air travel. We are confident the joint venture airline will help to stimulate market demand and provide economic benefits to India.”

Details of the airline’s branding, management team and products and services will be announced in due course.

The Tatas are also partnering with Tony Fernandes promoted Air Asia which is well under-way in establishing a new low cost carrier in India, AirAsia India.

Curiously, today’s announcement comes just a day after the Delhi high court admitted a petition seeking quashing of the start clearances granted to AirAsia India. The petitioner, Subramanian Swamy, claims the recently liberalised FDI policy allowing investments by foreign airlines in Indian airlines, allows for investments in existing airlines and not fresh start-ups such as AirAsia India.