Air Asia is coming to India, with the Tatas

Air Asia’s Tony Fernandes has just announced his plans to enter India’s aviation scenario. Air Asia is planning to start a new low-fare carrier in the Indian market, which will be a joint venture with the Tata group, one of India’s largest conglomerates, and a third investor. The JV will also mark the return of the Tatas to aviation, something they had to get out of long back when Air India, India’s original poster boy of aviation was taken away from them and nationalised.

As per this quote from Tony published by Reuters:

We have carefully evaluated developments in India over the last few years and we strongly believe that the current environment is perfect to introduce our low fares

Now I don’t know if the current environment suggests low fares will be supported, but Air Asia definitely has been known for disruptive pricing across the markets his airlines operates in.

The plan is to have a 49% stake in this airline, with the rest being held by the Tata Group and a company called Telestra Tradeplace. The focus is on setting up a hub in Chennai (MAA), and provide connectivity to tier II/tier III cities and towns.

Air Asia has signed a preliminary agreement to form the company with the other prospective shareholders, and already requested for permission to invest in an India, and once they get these permissions, they will go ahead and file for an airline permit.

This is a smart strategy I think, since the airline gets a clean slate to start with and does not have to bother with all the debt it would have to inherit from any existing airline, if it would have seeked to join in.

This is a developing story…

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