Eighteen years after its failed attempt, Tata group on Thursday joined hands again with Singapore Airlines to start a new full-service airline in India.
Tata Sons, the holding company of most of the operating firms of the over USD 100-billion salt-to-software conglomerate Tata group, today signed an MoU with Singapore Airline under which it will own 51 per cent stake in the proposed carrier. The rest will be with Singapore Airlines.
The group, which had in February announced a partnership with Malaysia's Air Asia for a low-cost carrier in India, said it has applied for approval from the Foreign Investment Promotion Board (FIPB) to establish the new airline, which will be based in New Delhi.
The initial Board of the new carrier will have three members, two nominated by Tata Sons and one nominated by Singapore Airlines. The Chairman will be Prasad Menon, nominated by Tata Sons.
"It is the Tata Sons' evaluation that civil aviation in India offers sustainable growth potential. We now have the opportunity to launch a world-class full-serve airline in India," Menon said of the proposed venture.
"We have always been a strong believer in the growth potential of India's aviation sector and are excited about the opportunity to partner Tatas Ons in contributing to the future expansion of the market," said Singapore Airlines CEO Goh Choon Phong.
According to Goh, Tata Sons is one of the most established and respected names in India.
"With the recent liberalization, the time is right to jointly bring consumers a fresh new option for full-service air travel. We are confident that the joint venture airline will help to stimulate market demand and provide economic benefits to India," he said.
This is the third attempt by the two partners to enter the Indian civil aviation sector.
In 1995, they had applied to FIPB for a full service airline, which was cleared a year later but the venture never took off due to a change in the civil aviation policy in 1997 that barred foreign carriers from holding stake in domestic airlines. The deal did not come through and years later former Chairman Ratan Tata had famously remarked that the deal failed because the group refused to bribe a Union minister.
The government last year changed policy to allow up to 49 per cent foreign investment in domestic airlines.
In 2000, Tatas and Singapore Airlines had jointly bid for the 40 per cent divestment of Air India but withdrew from it in December 2001. The disinvestment of Air India did not take place due to political opposition.
Unlike in its tripartite partnership with AirAsia and Arun Bhatia's Telestra Tradeplace Pvt Ltd for Air Asia India, in which Tata Sons holds 30 per cent stake but no operating role, in the new proposed full service carrier it will be in driver's seat.
Details of the airline's branding, management team and products and services will be announced in due course, the company said.
The Tatas have a long history of association with civil aviation in India. In 1932 JRD Tata had started Tata Airlines, which was later in 1946 renamed as Air India, which was nationalised 1953.