Kuala lumpur: AirAsia, Southeast Asia's biggest budget airline, plans to start a venture in India with the Tata Group after the government eased rules to lure investment in a country where air travel is set to triple.
The new airline plans to operate from Chennai in South India and will provide services to other local cities, AirAsia said in the statement. A carrier must complete five years of domestic operations before it can start overseas flights, according to Indian aviation rules.
AirAsia made an application to India's Foreign Investment Promotion Board to take 49 per cent in a venture with Tata Sons, owners of Jaguar Land Rover luxury vehicles, and Arun Bhatia of Telestra Tradeplace. Subject to an approval, the partners will then seek an air operators permit, the low-fare carrier said in a statement to the Kuala Lumpur stock exchange.
The move will help AirAsia get an entry into a nation where economic growth is encouraging more people to ditch trains for planes, helping triple the number of domestic air travellers to 159 million annually by 2021, according to government estimates. To help an industry mired in debt and losses, Prime Minister Manmohan Singh's government in September eased foreign investment rules prompting Jet Airways to start discussions with the Middle East's Etihad Airways.
"It's a very, very competitive joint venture," said Kapil Kaul, who heads the Indian unit of CAPA. "The coming together of the largest pan-Asian carrier with India's biggest corporate group. This is very ideal."
Tata Sons, the holding company of the $100 billion Mumbai-based conglomerate, will hold 30 per cent of the venture, Debasis Ray, a group spokesman, said in an e-mail. The group, which has interests in steel, hotels, software, beverages and automotive business, won't have any operating role in the venture, it said.
Arun Mishra, India's director-general of Civil Aviation, said the venture has not yet approached the regulator. AirAsia is among the fifty low-fare airlines that started in the Asia-Pacific region in the past decade to compete with full-service carriers as first-time travel surges in India, Indonesia and other developing economies. Singapore Airlines started Scoot and Tiger Airways, while Qantas Airways started Jetstar Airways.