AirAsia Berhad, through its investment arm, AirAsia Investment Ltd (AAIL), submitted (20-Feb-2013) an application to the Indian Foreign Investment Promotion Board (FIPB) to seek approval for AAIL to invest 49% into a proposed Indian JV together with Tata Sons Limited and Arun Bhatia of Telestra Tradeplace Pvt Ltd. This move comes amidst the backdrop of the Sep-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 JV company will make an application to Indian aviation regulators for the Air Operators Permit. Details include:
- MoU: The parties have signed a MoU 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 licence agreement and other related documents in the event the FIPB approval is obtained;
- India market: AirAsia said it "believes Indian aviation has enormous long-term growth potential and is expected to produce tremendous upside for first movers". It added: "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 emphasising a focussed and disciplined cost structure will tremendously benefit the Indian consumer". AirAsia founder and Group CEO Tony Fernandes added, “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”;
- Network scope: The JV plans to operate from Chennai, focused on providing domestic Tier II/Tier III city connectivity. Currently, AirAsia through its operations based in Thailand and Malaysia already connect Chennai, Bangalore, Tiruchirappalli, Kochi and Kolkata to ASEAN. [more - original PR]
Prior to the official announcement, Mr Fernandes, on his twitter page, said: "AirAsia will be making a significant step in our journey of being an ASEAN airline. Very proud day for me." In a separate post, he said: "Welcome to the airline business. Dump the private jet in india. Airasia india is the way. RT @Amit_Bhatia99: Hugely exciting venture involving my family, tata sons and the coolest guy around @tonyfernandes". He subsequently noted: "The response [to the news] has been huge".