Singapore Airlines Ltd tied up with Tata Group, owner of the Jaguar and Land Rover brands, to start an airline in India, its third attempt to tap surging demand in the world’s second-most populous nation.
Tata is to hold 51 percent of the venture and Singapore Air the remainder, the airline said in a statement on Thursday. The two companies entered into an initial agreement for a US$100 million investment and are seeking government approval to set up the full-service carrier, to be based in the capital, New Delhi.
Entering India will enable Singapore Air to get a foothold in a market where the number of air passengers is forecast to triple to 452 million by 2020. Asia’s third-largest economy last year permitted foreign airlines to buy stakes in local airlines, a move that brought in investments from budget carrier AirAsia Bhd and Abu Dhabi’s Etihad Airways PJSC.
“This is terrific news for Indian aviation,” Dubai-based Martin Consulting LLP chief executive officer Mark Martin said. “The Tata-SIA venture will provide the much-needed balance in Indian aviation space between full-service and budget carriers.”
Indian Prime Minister Manmohan Singh’s government changed laws last year to allow foreign airlines to buy as much as 49 percent in local companies, reversing a decade-old ban that had kept out carriers like Singapore Air from the Indian market.
AirAsia also chose Tata for its venture in India. Tata Sons Ltd, the holding company for the group, owns 30 percent in the new discount carrier, which is awaiting final approvals to start operations later this year.
Arun Bhatia of Telestra Tradeplace Pvt, who owns 21 percent in AirAsia India, is ready to buy out Tata’s stake in the budget airline venture as the group announced its second airline with Singapore Air, ET Now television reported, citing Bhatia.
Bhatia did not respond to four calls and two text messages to his mobile phone. Debasis Ray, a spokesman at Tata Sons, declined to comment on the ET Now report and said AirAsia did not object to the group forming a full-service airline.