AirAsia plans airline joint venture in India
Malaysia-based AirAsia through its investment arm, AirAsia Investment Ltd (AAIL), has entered in to a joint venture in India, with the plan to launch an Indian airline.
AAIL has submitted an application to the Indian Foreign Investment Promotion Board (FIPB) to seek approval for AAIL to invest 49 per cent into a proposed Indian joint venture together with Tata Sons Ltd and Arun Bhatia of Telestra Tradeplace Pvt Ltd, the company said in a statement.
India announced in September 2012 to open up the aviation sector to Foreign Direct Investment from foreign carriers. Tata Sons is an investment holding company, with investment across seven business sectors, including Materials, Engineering, Information Technology and Communications, Energy, Services, Consumer Products, and Chemicals. It holds promoter stakes in a number of Tata companies as well as joint ventures, and has minority investment in other companies.
Subject to FIPB approval, the proposed joint venture company will make an application to Indian aviation regulators for the Air Operators Permit. The parties have signed a Memorandum of Agreement that details high-level terms with regards to the proposed partnership.
"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," said AirAsia founder and Group CEO Tan Sri Dr. Tony Fernandes.
AirAsia is now Asia’s largest low-cost carrier with 118 aircraft and over 350 orders. It believes Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers. The joint venture plans to operate from Chennai, Tamil Nadu focused on providing domestic Tier II/Tier III city connectivity to Indian travelers. Currently, AirAsia through its operations based in Thailand and Malaysia already connect Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN.
In the statement, the airline also said that it is confident that it can replicate its unprecedented success across Malaysia, Thailand, Indonesia and other joint ventures. In particular AirAsia believes its success in affording people to fly through superior operational performance by emphasizing a focused and disciplined cost structure will tremendously benefit the Indian consumer.