Tata-Singapore Air Venture to Start Flights in Second Half 2014

Singapore Airlines Ltd. (SIA), Southeast Asia’s biggest carrier, and the Tata Group aim to start their joint-venture airline in the second half of this year, to tap surging air travel in world’s second-most populous nation.

The new carrier has leased 20 Airbus (AIR) A320 aircraft for a tenure of 12 years, according to Sanjay Singh, a New Delhi-based spokesman for the aviation alliance. He declined to specify the cost of the planes. “We expect to be airborne in the second half of 2014. It is difficult to predict” the exact time operations will start, he said.

The alliance will enable Singapore Air to get a foothold in a market where the number of air passengers is projected to triple to 452 million by 2020. India, Asia’s third-largest economy, in 2012 permitted foreign airlines to buy as much as 49 percent stakes in local carriers, reversing a decade-old rule and luring investments from Malaysia’s AirAsia Bhd. (AIRA) -- another Tata joint venture -- and Etihad Airways PJSC of Abu Dhabi.

India’s Foreign Investment Promotion Board approved the Singapore Air-Tata proposal, Economic Affairs Secretary Arvind Mayaram said in October. Tata will hold 51 percent and Singapore Air the rest in the New Delhi-based airline that still needs to obtain an airline license.

The Tata Group’s budget airline venture with AirAsia, Southeast Asia’s biggest budget carrier, received approval for its investment in March last year to start operations that will target smaller Indian cities out of its Chennai headquarters, AirAsia said in a Feb. 20, 2013 statement.

The twin aviation pacts by the $100 billion Tata Group last year will confront the region’s highest fuel costs, intense competition and a lack of adequate infrastructure.

Tata and Singapore Air have tried to enter Indian aviation unsuccessfully twice before. In 1994, the two had formed a venture to start an airline in India. Policy changes prevented that from starting and in 1998, Tata dropped its plan citing years of government delays. In November 2000, they teamed up to buy 40 percent in state-run carrier Air India that government was divesting. In September 2001, Singapore Air decided not to proceed with that plan.

To contact the reporter on this story: Bhuma Shrivastava in Mumbai at bshrivastav1@bloomberg.net

To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

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