Singapore Air, Tata Win Approval to Start India Airline

Singapore Airlines Ltd. (SIA), Southeast Asia’s biggest carrier, won initial approval from the Indian government to start an airline in the world’s second-most populous country with its partner Tata Group.

India’s Foreign Investment Promotion Board approved the proposal, Economic Affairs Secretary Arvind Mayaram said in New Delhi today. Tata will hold 51 percent and Singapore Air the remainder of the venture, which still needs to procure an airline license.

Entering India will enable Singapore Air to get a foothold in a market where the number of air passengers is forecast to triple to 452 million by 2020. Asia’s third-largest economy last year permitted foreign airlines to buy stakes in local carriers, a move that brought in investments from Malaysia’s AirAsia Bhd. (AIRA) and Abu Dhabi’s Etihad Airways PJSC.

Singapore Air said it’s yet to be informed of the decision by the Foreign Investment Promotion Board. The carrier is “very pleased with the reports of approval,” spokesman Nicholas Ionides said in an e-mail.

The venture will have four directors from Tata and two from Singapore Air, a government official told reporters in New Delhi, asking not to be identified citing rules. The airline would be based in the Indian capital city and its chairman would be from the Mumbai-based Tata group.

Prime Minister Manmohan Singh’s government changed laws last year to allow foreign airlines to buy as much as 49 percent in local companies, reversing a decade-old ban that had kept out carriers like Singapore Air from the Indian market. AirAsia, the region’s biggest budget carrier, also chose Tata, owner of the Jaguar Land Rover marque, for its venture in India.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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