New Delhi: In a move that augurs well for the Indian aviation sector and travellers, Malaysia-based low cost carrier AirAsia on Wednesday announced that it had decided to enter into a joint venture with Tata Sons to start a new airline in India and has applied for permission from the government.
Under the new FDI law that allows a foreign airline to pick up stake in an Indian carrier upto 49 per cent, Air Asia said it would seek approval to invest 49 per cent in the proposed joint venture that will also have “Arun Bhatia of Telestra Tradeplace Pvt. Ltd.” as the third stakeholder. The joint venture is proposed to be operated from Chennai.
The move will be a bonanza for Indian travellers since AirAsia founder and group CEO Tony Fernandes feels the “current environment (in India) is perfect to introduce AirAsia’s low fares which stimulate travel and grow the market”. But it will also further fuel the already intense competition in the domestic aviation sector since AirAsia’s competitive low fares are likely to give the existing airlines a run for their money.
According to reports, Tata Sons could hold about 30 per cent of stake and may not be involved in the operational aspects of the airline. Nevertheless, the development signals the return of the Tatas to the aviation industry.
The third stakeholder Arun Bhatia runs Telestra, an investment holding company, and one of his other group companies manufactures components for the aerospace industry.
“AirAsia Berhad (AirAsia) through its investment arm AirAsia Investment Ltd (AAIL) has submitted an application to the Indian Foreign Investment Promotion Board (FIPB) to seek approval for AAIL to invest 49 per cent into a proposed joint venture,” AirAsia said, in a statement.