New Delhi: There was really never any question, any doubt over whether the Foreign Investment Promotion Board would clear the proposal of Tata Sons and Singapore International Airlines for a 51:49 joint venture to set up an airline in India. And the proposal was cleared today, the very first time it was placed before the board for consideration.
The two partners can now begin the process of setting up an office in New Delhi and hiring employees while also beginning the process of applying to the Ministry of Civil Aviation and regulator DGCA for various clearances. From the day Tatas first announced their intention to partner long time friend SIA for launching a full service airline in India, almost everyone associated with the airline industry has welcomed this move. Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Reuters Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Reuters In fact, the Ministry of Civil Aviation is expediting some decision which will be of immense benefit to the new airline almost immediately after it is operational: 1)
The ministry will shortly move a Cabinet Note which seeks to lift the five year mandatory restriction on domestic airlines before they are allowed to fly overseas. Tata-SIA will be the biggest beneficiary if this rule is amended since its business will get the necessary fillip from quickly beginning overseas operations. 2) The ministry is also hopeful of some reduction in taxation on jet fuel by Maharashtra. Since Delhi and Mumbai airports account for almost two-thirds of all ATF purchased by Indian airlines, a reduction in ATF prices at Mumbai will be of immense benefit to all existing airlines as well as to new entrants like Tata-SIA. That everyone in the government came together to ensure that this proposal should get a speedy clearance is evident. Top officials of the Ministry of Civil Aviation had said yesterday that “the very name of Tata spells assurance, service quality and we will be most happy if the Tatas take an active role in the Civil Aviation sector in India.
” They also expressed hope that with Tatas holding majority 51 percent stake in the airline venture, it will bring more jobs and growth to India. Compare this with the minority 24 percent stake that Abu Dhabi’s Etihad wants to pick up in Jet Airways – and the kind of management and operational control it is already exercising in Jet – and officials’ worry over who controls an airline becomes evident. It seems the Finance Ministry was also keen to see this proposal cleared at the earliest. Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Though at present, the full service fare model makes little sense in domestic operations, perhaps it might work to the airline’s advantage on the international leg. Officials quoted earlier said the dominance that Etihad is likely to gain over India’s outbound air traffic after its deal with Jet should not unduly worry Tata-SIA.
“Singapore is a good place for hubbing and this alliance between Tata and SIA will mean an advantage to flights from India to the US wet coast and Australia, other regions. The Jet-Etihad combine is unlikely to take away too much traffic from these routes.” So almost every indicator is positive for the new airline. But as they say, well begun is only half done. Let the Tatas now live up to their reputation. The Tatas also have a 30 percent stake in another new airline venture – AirAsia India where AirAsia holds 49 percent equity and remaining 21 percent is with Telestra Tradeplace. This budget airline will begin operations much sooner than the Tata-SIA venture.
The two partners can now begin the process of setting up an office in New Delhi and hiring employees while also beginning the process of applying to the Ministry of Civil Aviation and regulator DGCA for various clearances. From the day Tatas first announced their intention to partner long time friend SIA for launching a full service airline in India, almost everyone associated with the airline industry has welcomed this move. Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Reuters Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Reuters In fact, the Ministry of Civil Aviation is expediting some decision which will be of immense benefit to the new airline almost immediately after it is operational: 1)
The ministry will shortly move a Cabinet Note which seeks to lift the five year mandatory restriction on domestic airlines before they are allowed to fly overseas. Tata-SIA will be the biggest beneficiary if this rule is amended since its business will get the necessary fillip from quickly beginning overseas operations. 2) The ministry is also hopeful of some reduction in taxation on jet fuel by Maharashtra. Since Delhi and Mumbai airports account for almost two-thirds of all ATF purchased by Indian airlines, a reduction in ATF prices at Mumbai will be of immense benefit to all existing airlines as well as to new entrants like Tata-SIA. That everyone in the government came together to ensure that this proposal should get a speedy clearance is evident. Top officials of the Ministry of Civil Aviation had said yesterday that “the very name of Tata spells assurance, service quality and we will be most happy if the Tatas take an active role in the Civil Aviation sector in India.
” They also expressed hope that with Tatas holding majority 51 percent stake in the airline venture, it will bring more jobs and growth to India. Compare this with the minority 24 percent stake that Abu Dhabi’s Etihad wants to pick up in Jet Airways – and the kind of management and operational control it is already exercising in Jet – and officials’ worry over who controls an airline becomes evident. It seems the Finance Ministry was also keen to see this proposal cleared at the earliest. Tata-SIA plans to launch a full service airline whose international hub would most likely be at Singapore. Though at present, the full service fare model makes little sense in domestic operations, perhaps it might work to the airline’s advantage on the international leg. Officials quoted earlier said the dominance that Etihad is likely to gain over India’s outbound air traffic after its deal with Jet should not unduly worry Tata-SIA.
“Singapore is a good place for hubbing and this alliance between Tata and SIA will mean an advantage to flights from India to the US wet coast and Australia, other regions. The Jet-Etihad combine is unlikely to take away too much traffic from these routes.” So almost every indicator is positive for the new airline. But as they say, well begun is only half done. Let the Tatas now live up to their reputation. The Tatas also have a 30 percent stake in another new airline venture – AirAsia India where AirAsia holds 49 percent equity and remaining 21 percent is with Telestra Tradeplace. This budget airline will begin operations much sooner than the Tata-SIA venture.
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