India’s civil aviation ministry Wednesday cleared a joint venture between Tata Sons Ltd. and Singapore Airlines Ltd (OTCMKTS:SINGY), or SIA, news reports said.
Ajit Singh, the country's civil aviation minister, reportedly gave a "No Objection Certificate", or NoC, to the new venture to create a new airline in the country after approving its board of directors recently. The new venture will now need to get various operations manuals approved by the Directorate General of Civil Aviation, or DGCA, before it can be given an Air Operators’ Permit.
“We are thrilled,” Sanjay Singh, a spokesperson for Tata-SIA Airlines, reportedly said according to Mint, a local newspaper. “There is a lot of hard work that has gone on in the back-end. We are now going to apply to the DGCA (Directorate General of Civil Aviation) very soon.”
The Tata-SIA joint airline, which is yet to be named, will be launched in the country with an initial investment of $100 million, including a foreign direct investment of $49 million.
The next step for Tata-SIA will be to acquire a formal airline license, which requires the company to prove its technical capabilities including its access to resources such as staff, engineering set-up and aircraft, and involves a process that could take more than three months. Malaysian discount carrier AirAsia, which also plans to enter India in a joint venture with the Tata group, received an NOC last September but is yet to receive a license to begin operations in the country.
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“This will be the first time ever in India that two entities like Tata and SIA, with such a strong financial base, would be commencing airline operations, making it more likely to be a success story. I think it’s a welcome move as it will bring in an efficient airline into the system,” Manet Paes, a former senior executive with Air India and an independent aviation analyst, said, according to Mint.
This is the third time that Singapore Airlines and Tata Sons have partnered to enter into the Indian civil aviation sector. Earlier, the two companies had twice tried unsuccessfully start a national carrier- once by trying to buy a 40 percent stake in the national carrier, Air India and the second when they tried to begin an Indian airline with 40% equity contribution by SIA, which had failed. The Tata group’s founder, JRD Tata, started Tata Airlines in 1932, which was eventually named Air India in 1946, and was later nationalized.