Mumbai, Feb 20 (PTI): Malaysian carrier AirAsia on Wednesday said it has sought the government's permission to launch a new airline in India and has set up a joint venture with Tata Group, as well as an investment firm for the purpose.
The budget carrier said its investment arm AirAsia Investment “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.
Air Asia 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 US$100 billion Tata Group, this would be its second foray into the aviation segment. The late JRD Tata had launched Air India before Independence.
Ratan Tata, Chairman Emeritus of the Tata Group, had indicated in an interview to PTI days before he retired as chairman last year that the conglomerate was unlikely to enter into the sector because of ”destructive competition”.
Bombay House could not be contacted immediately for a reaction on the AirAsia announcement.
The Tata Group holds nearly six per cent equity in SpiceJet, but has maintained that it was only a financial investor in the budget carrier.
Telestra Tradeplace is an investment holding company of Arun Bhatia and one of its group companies is Hindustan Aerosystems, which manufactures and supplies precision components for the aerospace industry.
Bhatia's son Amit serves on the Board of Directors at Queens Park Rangers Football Club in the UK alongside Tony Fernandes, the founder of AirAsia.
Amit is married to Vanisha Mittal, the only daughter of steel tycoon Lakshmi Mittal, according to Wikipedia.
Within 11 years of its existence, AirAsia has become the largest no-frill carrier in Asia with 118 aircraft, and over 350 on order.
Industry observers have maintained that it makes more sense for foreign carriers to start a new airline with a local partner so as to avoid being burdened by the huge debts and losses facing existing Indian airlines.