Oct. 24--NEW DELHI -- The Foreign Investment Promotion Board (FIPB) on Thursday cleared the proposed Tata-Singapore Airlines joint venture (JV) for setting up a full-service airline, economic affairs secretary Arvind Mayaram said.
Singapore Airlines had approached the board for permission to invest $49 million in the proposed venture with Tata Sons, the holding company of the Tata Group firms.
Tatas welcomed the decision. "We are yet to formally hear from the FIPB. We are delighted with the reports of approval," Tata spokesman said.
The proposal was to be taken up last week, but the board's meeting was postponed for 24 October.
Tata-Singapore Airlines will now approach the aviation ministry and regulator for an airline permit.
Aviation consulting firm Centre for Aviation CAPA said it appears to be all clear for the new airline venture.
"I term it as a very important milestone for Indian aviation and credit to government for being decisive and clear in its thinking," said Kapil Kaul, South Asia CEO for CAPA. "We expect airline licence clearance within six months with aviation ministry no object certificate likely by January 2015. All in order for this game changing JV."
The venture, to be called Tata SIA Airlines Ltd, will have Tata Sons as the majority partner with a 51% stake, while Singapore Airlines will hold 49%.
The two companies, that plan to establish the airline with an initial investment of $100 million, announced their JV agreement on 20 September.
This is their third bid at a joint venture. In 2000, they abandoned an attempt to buy a 40% stake in Air India. Political resistance and corporate rivalries were blamed for the Tata group abandoning the project. An earlier attempt by the two companies to start an Indian airline with 40% equity contribution by Singapore Airlines was also aborted.
Copyright 2013 - Mint, New Delhi
