AirAsia's 800 million rupee JV with Tata group approved

NEW DELHI Wed Mar 6, 2013 4:21pm IST

1 of 2. An AirAsia Airbus A320 passenger jet lands at Sukarno-Hatta airport in Tangerang on the outskirts of Jakarta in this January 30, 2013 picture.

Credit: Reuters/Enny Nuraheni/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

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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