AirAsia application for approval of a proposed Indian airline joint venture
20-Feb-2013 AirAsia Berhad ("AirAsia") through its investment arm, AirAsia Investment Ltd. ("AAIL") has submitted an application to the Indian Foreign Investment Promotion Board ("FIPB") to seek approval for AAIL to invest 49% into a proposed Indian joint venture together with Tata Sons Limited and Mr. Arun Bhatia of Telestra Tradeplace Pvt. Ltd.. This move comes amidst the backdrop of the September 2012 decision by the Government of India to open up the aviation sector to Foreign Direct Investment from foreign carriers.
Subject to FIPB approval, the proposed joint venture company will make an application to Indian aviation regulators for the Air Operators Permit. The parties have signed a Memorandum of Agreement that details high-level terms with regards to the proposed partnership including the proposal to execute definitive agreements such as a shareholders agreement, a brand license agreement and other related documents in the event the FIPB approval is obtained. At such time the FIPB approval is granted AirAsia will issue a further announcement in the form prescribed under the Main Market Listing Rules.
As a pioneer of the low cost carrier ("LCC") model in Asia and currently Asia's largest LCC with 118 aircraft and over 350 orders, AirAsia believes Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers. The joint venture plans to operate from Chennai, Tamil Nadu focused on providing domestic Tier II/Tier III city connectivity to Indian travelers. Currently, AirAsia through its operations based in Thailand and Malaysia already connect Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN.
AirAsia founder and Group CEO Tan Sri Dr. Tony Fernandes remarked, "We have carefully evaluated developments in India over the last few years and strongly believe that the current environment is perfect to introduce AirAsia's low fares which stimulate travel and grow the market."
AirAsia is confident that it can replicate its unprecedented success across Malaysia, Thailand, Indonesia and other joint ventures. In particular AirAsia believes its success in affording people to fly through superior operational performance by emphasizing a focused and disciplined cost structure will tremendously benefit the Indian consumer.