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Tata-SIA venture eyes flights abroad if rules eased

LiveMint logoLiveMint 14-05-2014 Anurag Kotoky

Singapore Airlines Ltd’s (SIA) Indian venture will fly overseas if the South Asian nation’s next government allows carriers that are less than five years old to operate internationally.

Aviation minister Ajit Singh said in January that India is planning to scrap a rule that requires local airlines to have five years of domestic operations and 20 planes to start overseas services.

Indian elections ended this week with votes to be counted on 16 May. This leaves the decision to the next administration.

“When we initially applied to set up the airline, the 5-20 rule was very much there”, Sanjay Singh, vice-president for public affairs at Tata-SIA Airlines Ltd, said in an interview on Tuesday. “Now that it looks like the rule will be scrapped, we will definitely fly international,” he added.

Singapore Airlines and Mumbai-based Tata Sons Ltd are starting a full-service carrier to tap travel demand among India’s 1.2 billion people. Overseas routes would allow the venture to better compete with Emirates, the biggest foreign carrier operating in India, and Abu Dhabi’s Etihad Airways PJSC, which bought a 24% stake in Jet Airways (India) Ltd to help build the sheikdom into an intercontinental transfer hub.

Tata-SIA will offer business and economy class seats on local flights, Singh said. It’s too early to speculate which international routes the airline might fly, he added.

Only state-run Air India Ltd and Jet Airways offer domestic business class.

The business travel market in the $1.8 trillion economy is Asia’s fastest growing and projected to double by 2015, according to the Global Business Travel Association.

Business travel

There is a sizeable number of people willing to travel business class in domestic flights. Big corporate travellers are willing to pay extra for it, Singh said.

AirAsia Bhd, the region’s biggest budget airline, said last week that it’s received an operating license for its Indian venture with Tata Group. India eased foreign investment rules for aviation in 2012, heralding increased competition even as most existing carriers are loss-making.

Tata-SIA plans to fly leased Airbus Group NV’s A-320 planes on nine routes locally in the first year of operations starting 1 September, rising to 19 routes by the fourth year, according to its regulatory application and a company statement.

The Directorate General of Civil Aviation is seeking public opinion on Tata-SIA’s proposed entry as it processes the application. The regulator is also trying to reverse an airline- safety rating downgrade by the US Federal Aviation Administration in January, which stops Indian carriers adding new flights to the US. Bloomberg

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