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SIA realises long-standing dream with new Tata Sons joint venture
Shekhar Niyogi, Kolkata, September 20, 2013
 

SINGAPORE Airlines (SIA) has finally inked a memorandum of understanding with Tata Sons for a full-service airline, completing the carrier's quest for a foothold in India that began almost 20 years ago.

 

Under the terms of the MoU, Tata will put in US$51 million for a 51 per cent stake in the joint venture, while SIA will invest US$49 million for a 49 per cent stake. A proposal for the new airline, to be based in New Delhi, has been sent to the Foreign Investment Promotion Board for approval.

 

Tata Industries' director, Prasad Menon, will helm the airline as chairman, while SIA's executive vice president, commercial, Mak Swee Wah, has been appointed SIA's nominee to the board.

 

Goh Choon Phong, CEO of SIA, said in a media statement: "We have always been a strong believer in the growth potential of India's aviation sector, and are excited about the opportunity to partner Tata Sons in contributing to the future expansion of the market."

 

Analysts believe that the vacuum left by Kingfisher Airlines' grounding will be filled by the new joint venture airline.

 

SIA and Tata attempted a joint venture in the 1990s, only to be struck down by the Indian government. However, a recent change in government policy allowing foreign direct investment in aviation paved the way for this latest foray, as well as the formation of AirAsia India (TTG Asia e-Daily, July 4, 2013) and the Etihad Airways-Jet Airways collaboration (TTG Asia e-Daily, December 4, 2012).

 

Rajendra Churiwala, director – eastern region, IATA Agents Association of India, welcomed news of the joint venture, saying: "Given the cost dynamics of running an airline in India, investors with very deep pockets are needed to keep the aviation industry afloat in India.

 

"With the high state taxes levied on aviation turbine fuel, it will be a challenge for anyone to carve a healthy bottom line in the business."

 
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