SIA and India's Tata to set up full-service carrier

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Singapore Airlines is intending to establish an Indian-based airline in co-operation with the diversified Tata Group.

Under the joint-venture plan SIA will take a 49% share of the New Delhi-based carrier, with Tata holding the balance.

SIA says the agreement, currently a memorandum of understanding, sets out a $100 million investment to be funded in respective proportions by the shareholders.

The unnamed airline will be a “full service” carrier, SIA states. Its creation is subject to regulatory approval. The airline will have a three-member board.

SIA says the decision follows the recent Indian government clearance allowing foreign airlines to invest in local airlines, up to a maximum shareholding of 49%.

“The Indian aviation industry is projected to experience future high growth rates,” it says, adding that the government’s stance “provides an opportunity for SIA to participate directly in one of the fastest growing and largest aviation markets globally”.

SIA chief Goh Choon Phong adds: “With the recent liberalisation, the time is right to jointly bring consumers a fresh new option for full-service air travel.

“We are confident the joint venture airline will help to stimulate market demand and provide economic benefits to India.”

SIA says it has applied for Foreign Investment Promotion Board approval for the plan. No fleet plan, branding or network has yet been disclosed.

Tata has proposed Prasad Menon as chairman of the board. Tata will nominate two board members, and SIA the remaining one.