Singapore Airlines-Tata joint venture proposal would be a big boost for SIA - and AirAsia?

Singapore Airlines (SIA) has taken a major step forward in implementing its new long-term strategy with the proposed establishment of a joint venture carrier in India with Indian conglomerate Tata. The SIA Group will have a 49% stake in the new full-service carrier, giving SIA a major presence in a strategically important market. Tata will have a majority 51% stake, giving it a second carrier in its portfolio along with AirAsia India and a two-brand strategy that follows the formula increasingly used by airline groups throughout Asia.

For SIA, close involvement and equity in a new airline in India follows the acquisition of a 19.9% stake in partner Virgin Australia. Australia, India and China are SIA's key markets and of strategic interest to the group as it increases focus on the fast-growing Asia-Pacific region. A partnership with and potential investment in a Chinese carrier is the only remaining missing major piece of the puzzle SIA has been working on since Goh Choon Phong took over as CEO at the beginning of 2011.

Mr Goh's bold new strategy also includes investments in the budget end of the market, again with a focus on the Asia-Pacific region which comes as SIA tries to reduce its reliance on the long-haul passenger and cargo markets. SIA has recognised the opportunities in faster growing budget end with the launch of Scoot and increased involvement in Tigerair but also wants to maintain its leading position at the top end of the market, with continued investment in the SIA premium product and now a new full-service airline in India.