As reported here in December 2012, Tony Fernandez’s AirAsia and Tata Sons have come to an agreement to form a JV, bringing the Tata family back into the airline sector for the first time since 1953 when Tata Airlines was nationalised to form Air India. Today we also find out that the Bhatia family is involved in the JV via their Telestra Tradeplace investment vehicle giving direct links to the Mittal family. AirAsia will have a 49% stake, Tata Sons 30% and Telestra Tradeplace 21%.
The new airline, to be headquartered at Chennai, will start operations in the last calendar quarter of 2013 under the powerful AirAsia brand. The airline already flies into several south Indian cities, linking them with major Asian hubs so this JV is simply joining the dots and filling the Kingfisher void at the same time.
This is the first foreign direct investment (FDI) after the Indian government relaxed ownership rules, allowing foreign carriers to hold 49% stake in a domestic airline.
The parties have made an application to the Foreign Investment Promotion Board for approval, after which they require the blessings of the civil aviation ministry. They will then have to approach the airline regulator for an air operator's permit.
You cannot argue with the political clout of this JV and that, above all else, is what an airline needs in India right now in order to succeed. I would argue that if this airline cannot make it work and capture the imagination of the Indian people to travel by air then there is no hope whatsoever. Competitors should be both worried and expectant at the same time for this airline could bring with it some sway in the fight against the mass of red tape that strangles the Indian aviation sector at this time.
The return of Tata
