Jan. 03--MUMBAI -- Tata Sons Ltd and Singapore Airlines Ltd (SIA) are working to start their proposed full-service airline as early as at the beginning of the next financial year although experts anticipate delays because of regulatory red tape and impending general elections.
The proposed joint venture airline, based out of New Delhi, will initially focus on Mumbai and Bangalore besides the national capital.
According to two persons close to the development, the airline company has started recruiting pilots and is finalizing its choice of Airbus A320 planes for its fleet.
"Last week, Tata-SIA applied for a no-objection certificate (NOC) from the civil aviation ministry. It has also furnished details of the directors who need security clearance from the ministry of home affairs," one of the persons said. Both persons spoke on condition of anonymity.
"Commercial matters related to the new airline will be revealed at a later date," a Tata Group spokesperson said. A Singapore Airlines spokesperson said he does not have new information to provide at this point of time.
On 19 September, Tata Sons and SIA announced a joint venture to enter the Indian aviation market with a proposal to invest $100 million in a full-service airline. Tata Sons will own 51% and SIA the remaining.
Tata Sons had earlier agreed to join a venture with Malaysia-based AirAsia Bhd and Arun Bhatia of Telestra Tradeplace Pvt. Ltd to form a local low-fare airline that is awaiting the civil aviation ministry's final go-ahead. AirAsia has a 49% stake in that venture, with Tata Sons taking 30% and Bhatia holding the rest.
Some experts say regulatory processes and general elections due by the middle of the year may delay the Tata-SIA venture.
If indeed the Tata-SIA airline manages to launch in the first quarter of the next financial year, competition will intensify in Indian aviation at a time when existing airlines are struggling to make money in the face of slower economic growth and high fuel prices and other operating costs. Traditionally, the June quarter is a good quarter for airlines because of summer holidays.
"It is very difficult to predict regulatory outcome in India. So I remain uncertain about a fast track approval given the track record of the Directorate General of Civil Aviation (DGCA) and the ministry of civil aviation," said Kapil Kaul, chief executive officer (South Asia) Capa Centre for Aviation
Kaul noted that AirAsia India is yet to receive approvals. AirAsia India had applied for its air operating permit (AOP) in October.
Kaul is expecting the Tata Sons-SIA airline to take off at the earliest by September-October after getting all necessary approvals. The airline would take to the skies after making sure it is well prepared, he added.
A senior civil aviation ministry official said the ministry had received the application for an NOC and it would have to apply for an air operating permit to the DGCA. "Tata Sons is fast-tracking the process with the help and experience of SIA. We are not expecting any delays like in the case of AirAsia India, which had delayed in giving applications for security clearances for its directors," the official said.
The person quoted in the first instance said Tata-SIA was in the process of preparing documentation for leasing aircraft and readying other infrastructure to avoid possible delays.
"The idea is to clear things much in advance of general elections. The recruitment of pilots is progressing," he added.
On 17 December, Mint reported that Tata Sons and SIA had started putting together a team that will oversee the new joint venture airline in India, the South-East Asian airline's third attempt to tap the Indian aviation market.
These include Phee Teik Yeoh, who is likely to lead the Tata-SIA project and is currently divisional vice-president (IT application services) in Singapore Airlines.
Copyright 2014 - Mint, New Delhi
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