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Indiaexportnews.com

Singapore Airlines, Tata sign agreement to set up new Indian carrier

  23.09.2013    

Singapore Airlines (SIA) and India's Tata Group plan to form a full-service airline based in New Delhi, adding another venture in the rapidly growing, but loss-making sector, according to the Shipping Gazette.
The two companies will invest US$100 million to start the airline, with Tata Sons holding 51 per cent and SIA will hold the remaining shares.
The tie-up is the second airline joint-venture this year by Tata, a software conglomerate that has become India's biggest business, Reuters reports, recalling that Tata joined Malaysia's AirAsia to start a Chennai-based budget carrier.
While prospects look good for India's domestic air traffic, the industry is hobbled by high fuel costs and taxes and low fares, with four out of five of the main carriers losing money and budget carriers taking up 70 per cent of the domestic market.
"This will open up competition in the westbound routes from India," said KPMG aviation analyst Amber Dubey. "With this JV, SIA (Singapore Airlines) gets a play in the growing international travel from India."
India requires airlines to confine themselves to domestic service for five years before flying overseas, though officials have indicated that the rule could be relaxed.
Regulatory approvals still lie ahead and the new venture could take more than a year to become operational, said Kapil Kaul at the Centre for Asia Pacific Aviation, a consultancy.
Tata Airways was India's largest airline before the government took it over in 1953, rebranding it Air India. In 2000, Tata and Singapore Airlines jointly bid for a stake in Indian Airlines, the state carrier that later merged with Air India. Old rules, since revised, prevented foreign carriers from investing in Indian airlines, which stopped the proposed purchase.


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