AirAsia seeks Indian govt’s nod to join hands with Tata Group to enter country’s aviation

Malaysia’s no-frills carrier AirAsia has sought the approval of the Indian Government to join hands with the Tata Group to enter the aviation sector.

This would be the first investment in the sector by a foreign airline after the Government raised the foreign direct investment (FDI) limit from 26% to 49% in 2012.

AirAsia has applied to the Foreign Investment Promotion Board (FIPB) to take a 49% stake in a venture with Tata Sons Ltd., and Arun Bhatia’s Telestra Tradeplace.

Telestra Tradeplace is an investment holding company of Arun Bhatia. One of its group companies is Hindustan Aerosystems Pvt Ltd., which manufactures and supplies precision components for the aerospace industry. If FIPB grants clearance to the proposal, the airline operators would then need approval from the Director General of Civil Aviation (DGCA) to start operations.

Stakes of the three companies:

  • Tata Sons will hold 30% without any operating role in the airline.
  • AirAsia will hold 49%
  • Hindustan Aviation of the Bhatias will hold 21%.

This step also marks the return of Tata Group to the aviation sector. State-owned Air India had grown out of Tata Airlines, which started operating in 1932. The next attempt was in the mid-90s when the Tata Group joined hands with Singapore Airlines to bid for a stake in Air India which never occurred.

The proposed joint venture would operate from Chennai, and would focus on providing domestic connectivity to Tier-II and Tier-III cities. As per existing rules, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.



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