Mumbai: Tata Sons have tied the knot with Singapore Airlines (SIA) once again to form a full-service domestic airline based in New Delhi. The move comes 18 years after their last joint effort was scuttled by the government of the day.
The Tatas have already entered the low-cost carrier space in February this year after tying up with Tony Fernandes’ Air Asia. However, Tata Sons had made it clear that the airline would be run by Air Asia, which has 49% stake with the Bhatia family controlling 21%.
However, in the new venture (the groups are yet to announce a brand name), the Tatas will be the driving force with a 51% stake, with SIA taking the rest. And the two have made a commitment to the Foreign Investment Promotion Board (FIPB) to invest $100 million to begin with. In contrast, the initial equity investment in the Air Asia joint venture was only one-third at $30 million.
The three-member board of the Tata-SIA venture will consist of two Tata nominees -- Prasad Menon, director in Tata Industries, as chairman and Mukand Rajan, member of the group executive council of Tata Sons. Mak Swee Wah executive vice president, commercial of SIA, will represent the foreign carrier. The airline have made Delhi their operational hub because of the huge capacity constraints in the Mumbai airport and better infrastructure facilities at the Delhi airport.
Analysts are however apprehensive about the impact this new venture will have on the Air Asia JV. Sources in Tata group, however, said such fears were unfounded as the Malaysian company was aware of the negotiations from the beginning and have had no objections for the Tatas to go ahead with such a deal.
Read News In Full 19/09/13 Business Standard
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