AirAsia in JV with Tatas

The Tata Group is likely to re-enter the Indian aviation sector through a joint venture with Malaysian low-cost carrier AirAsia and Arun Bhatia of Telestra Tradeplace. The Tatas’ move could be a game-changer for India’s beleaguered civil aviation sector.

AirAsia, through its investment arm, AirAsia Investment Ltd (AAIL), has submitted an application to the Foreign Investment Promotion Board (FIPB) to seek approval for AAIL to invest 49% in a proposed JV with Tata Sons Ltd and Arun Bhatia of Telestra Tradeplace.

The proposal comes in the wake of government opening up the aviation sector to FDI from foreign carriers in September last year.

“Subject to FIPB approval, the proposed joint venture company will make an application to the Indian aviation regulator for the Air Operators Permit. The parties have signed a memorandum of agreement that details high-level terms with regard to the proposed partnership,” AirAsia said in a statement.

The JV plans to operate from Chennai and will focus on providing domestic Tier 2 and Tier 3 cities.

AirAsia through its operations based in Thailand and Malaysia, connects Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN countries.

“While we will continue operating on the existing international routes, the proposed JV will be a domestic carrier,” said Suresh Nair, regional manager (India, Sri Lanka and Bangladesh) at AirAsia.

AirAsia founder and group CEO Tony Fernandes said, “We have carefully evaluated developments in India over the last 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 has 118 aircraft and over 350 orders.

Couple of hours before the airline issued the statement, Fernandes who calls himself a dreamer and an entrepreneur on micro blogging site Twitter tweeted, “In a couple of hours AirAsia will be making a significant step in our journey of being an Asean Asian airline. Very proud day for me.”

Telestra Tradeplace is an investment holding company of Arun Bhatia and one of its group companies is Hindustan Aerosystems Pvt Ltd, which manufactures and supplies precision components for the aerospace industry.

Bhatia’s son Amit is Lakshmi Mittal’s son-in- law. Amit Bhatia and Air Asia’s chief Tony Fernandes are also co-owners of British soccer team Queens Park Rangers. Amit Bhatia tweeted, “Hugely exciting venture involving my family, Tata Sons and the coolest guy around, Tony Fernandes.”