Tata-SIA on fast track but AirAsia may not fly before 2014 summer

At last some news about the two new airlines and their launch plans. The Tata-Singapore Airlines has applied to the Ministry of Civil Aviation for a no-objection certificate, giving mandatory details such as number of directors on its board and seeking a security clearance for them from the Ministry of Home Affairs. But the second Tata aviation venture, AirAsia India, has still not been granted the operating permit and is therefore unlikely to take to the skies before summer schedule of 2014. AirAsia India had already secured the NoC earlier.

A senior offcial in the Ministry confirmed both these developments to Firstpost, saying the NoC application from Tata-SIA has been received over the last few days. In Tata-SIA, Tata Sons is the majority shareholder with 51 percent stake while in AirAsia India it will hold 30 percent stake. The majority owner in AirAsia India is AirAsia Bhd with 49 percent stake while the remaining 21 percent rests with Telestra Tradeplace. Both airline ventures were earlier cleared by the Foreign Investment Promotion Board.

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There has been much speculation about the apparently fast-track treatment that the Tata-SIA venture has received from various Government departments against the rather slow pace of clearances being accorded to AirAsia India. The NoC for Tata-SIA may also arrive fairly quickly. Thereafter, it will approach aviation regulator DGCA for a flying permit.

For AirAsia India though, delays abound. Now, another hitch could be the voluntary retirement that current Director General of Civil Aviation has taken - his last day in office is 31 December. And till now, there has been no decision on a successor. So it is possible that AirAsia’s launch plans get further delayed since its operating permit still needs to be issued by the DGCA. The official quoted earlier said there is a long-drawn procedure for issuing a Scheduled Operators’ Permit (SOP).

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The two venture are expected to address widely different segments of the domestic aviation business - AirAsia India would be an ultra low cost carrier, based out of Chennia whereas Tata-SIA would be a full service carrier, based in New Delhi.

There has been persistent speculation over the Tatas pulling out of AirAsia India since the two business models are widely divergent and may not offer synergies. This speculation has been denied by the Tatas and Civil Aviation Minister Ajit Singh had earlier clarified that no aviation rule has been violated by the Tatas in having a stake in two separate airline ventures. The ministry official quoted earlier said in case the Tatas were to pull out, the entire process will have to be cancelled.

“The FIPB approval was given based on the shareholding structure submitted at that time. If there is going to be a change in shareholding, a fresh FIPB approval will of course be needed,” he said.

Then, industry sources tell us both AirAsia India and Tata-SIA are almost certain to use the Airbus 320 aircraft to begin with. AirAsia may start operations with 10 aircraft but Tata-SIA will begin with five initially.

Speaking to Firstpost earlier, top officials associated with Tata-SIA had said earlier thatthe airline will be flying from the winter schedule of 2014-15. They had also said that the new airline is determined to be a full service carrier though cost structures in India do not support this model as of now.

“We are clear, the basics of full service will be there from day one. So we will offer economy and business class travel, there will be food on our flights and there will be a well defined frequent flyer programme. What other differentiation we will do, will become clear closer to launch. We will not be a budget carrier”