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AirAsia India set to take flight in Q4

Posted on 21 Feb 2013 at 13:02 pm by Corinne Wan

Malaysia-based low cost carrier, AirAsia, through its investment arm, AirAsia Investment Ltd, submitted an application to the Indian Foreign Investment Promotion Board (FIPB) to seek approval to invest 49% into a proposed Indian joint venture airline – AirAsia India.

AirAsia’s partners in the joint venture, inked on on February 20, are two Indian companies - Tata Sons Limited and Arun Bhatia of Telestra Tradeplace Pvt. Ltd holding 30% and 21% stake respectively.

The Tata Group has investments in numerous business sectors that include information technology/communications, engineering, consumer products and energy. Telestra is a unit of Hindustan Aerosystems Pvt Ltd.

This move comes amidst the backdrop of the September 2012 decision by the Government of India to open up the aviation sector to Foreign Direct Investment from foreign carriers.

Subject to FIPB’s approval, the proposed joint venture will make an application to Indian aviation regulators for the Air Operators Permit. The airline is expected to take to the skies in the fourth quarter of this year, possibly in September, subject to all regulatory approvals being obtained from the Indian authorities.

AirAsia founder and group CEO Tan Sri Tony Fernandes (pictured right) said the company believes Indian aviation has enormous long-term growth potential, and is expected to produce tremendous upside for first movers.

The proposed airline plans to operate from Chennai, Tamil Nadu and focus on providing domestic Tier II/Tier III city connectivity to Indian travellers. It will start operations with three to four aircraft and 300 staff if it gets the Indian government’s approval. Investment in AirAsia India is likey to be between US$30 million to US$60 million.

Currently AirAsia, through its operations based in Thailand and Malaysia, already connect Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN.

 “We have carefully evaluated developments in India over the last few years and strongly believe that the current environment is perfect to introduce AirAsia’s low fares, which stimulate travel and grow the market,” added Fernandes.

The low-cost airline currently operates Malaysia AirAsia, AirAsia Japan, Thai AirAsia, Indonesia AirAsia and AirAsia Philippines.

When AirAsia India takes flight it would see Fernandes’ dream of having an AirAsia unit to serve the aviation needs of India's 1.2 billion people come true.

Last year when India announced the opening up of her skies to foreign investors he had then tweeted, “Fantastic news that India has opened up investment to foreign airlines great that Indian government has put people first. Will we be in India Well, let's see.”

Guess Fernandes has answered his own question. AirAsia is in India now.

Update:  AirAsia Bhd’s proposal to set up AirAsia India won approval in early March from the Indian government's foreign investment regulator - the Foreign Investment Promotion Board - paving the way for the first foreign carrier to enter India/s domestic aviation sector.
Tags: AirAsia , AirAsia India , Tata Sons , Bhatia , Chennai , joint venture , Foreign Investment Promotion Board , Tony Fernandes