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Update on Air Asia and Tata Sons JV

Air Asia and Tata Group which have proposed to set up a domestic airline along with Arun Bhatia of Telestra Tradeplace, have sought approval for renting and leasing of aircraft, besides carrying of air freight.

According to sources, in its application to the FIPB, the partners have also sought permission for engaging in ancillary activities.

"Other activities for which they have sought permission include air transport carriers (of freight), cargo handling, renting and leasing of aircraft," a source said.

The application for renting and leasing of aircraft, however, does not include financial leasing.

The Malaysian budget carrier had sought the government nod to launch a new airline through a joint venture with the Tata Group and Bhatia.

Air Asia CEO Tony Fernandes has said that the new airline may take to the sky by this year-end with 3-4 Airbus A-320s, and his company will initially invest around $50 million.

An application has already been moved by Air Asia's investment arm, Air Asia Investment Ltd (AAIL) before the Foreign Investment Promotion Board (FIPB) to seek approval for acquiring 49 per cent equity in the company.

Tata Sons is likely to pick up 30% and one of Bhatia's companies, Hindustan Aerosystems, 21%.

After the FIPB approval, the JV will make an application to the aviation regulator DGCA for the Air Operators Permit to carry out flying operations.

Fernandes has said the new airline will be based in Chennai and in the initial phase concentrate on destinations in South India where Air Asia already operates. It will focus on providing connectivity to Tier-II and III cities.

The proposed airline's Board will have six directors. Air Asia will have two board members - Fernandes and Kamarudin Bin Meranun apart from Fernandes. Tata Sons will also have two members - R Venkataramanan and Bharat Vasani, while Telestra Tradeplace will be represented by Arun Bhatia.

The sixth board member will be an Indian national, who will be appointed as non-executive Chairman.

FIPB is likely to take up Air Asia's application for the joint venture on March 6.
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