AirAsia's 800 million rupee JV with Tata group approved

NEW DELHI Wed Mar 6, 2013 3:03pm IST

An Airbus A340 AirAsia X passenger jet arrives on its inaugural flight from Kuala Lumpur to Paris Orly Airport February 14, 2011. REUTERS/Charles Platiau/Files

An Airbus A340 AirAsia X passenger jet arrives on its inaugural flight from Kuala Lumpur to Paris Orly Airport February 14, 2011.

Credit: Reuters/Charles Platiau/Files

Stocks

   

NEW DELHI (Reuters) - AirAsia Bhd's (AIRA.KL) proposal to set up an airline jointly with the Tata group was approved on Wednesday by the Indian government's foreign investment regulator, paving the way for the first foreign carrier to enter the domestic aviation sector.

Malaysia's AirAsia, the largest budget carrier in Asia, plans to launch a regional airline in India with an initial investment of 800 million rupees to cash in on rising demand for domestic air travel among India's rapidly expanding middle class.

The new airline, AirAsia India, will be managed by the Malaysian company and based in the southern Indian city of Chennai.

AirAsia, through its investment arm, will own 49 percent of the new airline, with Tata Sons Ltd, the holding company of salt-to-software conglomerate Tata group, owning 30 percent. Arun Bhatia, who owns Telestra Tradeplace, an investment firm, will hold the remainder.

"It's been cleared," said Arvind Mayaram, India's economic affairs secretary, when asked about the deal. "Now they will have to take the necessary licences from the DGCA. They can start operating now once they get the licence."

The DGCA is India's aviation regulator, the Directorate General of Civil Aviation.

Earlier on Wednesday, Aviation Minister Ajit Singh said he does not expect any major hurdles for the venture.

India's aviation industry, which has been plagued by losses due to high operating costs and fierce competition, was opened to foreign investors in September last year. Foreign carriers are now able to purchase up to 49 percent of local airlines.

(Reporting by Anurag Kotoky and Rajesh Kumar Singh in NEW DELHI; Writing by Aradhana Aravindan; editing by Miral Fahmy)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Cipla Shares

Cipla Shares

Cipla jumps after key generic launch.  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit.  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks.  Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter.  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage