Almost certainly, Tatas will bid for Air India and explore merger plans
MUMBAI: The Tatas seem to be approaching the decision to bid for Air India in partnership with Singapore Airlines and have already started working on the structure for such acquisition, including a merger of, in which they own 51% and, 100% subsidiary of the national airline owned by the government.
Not only that, it is known with certainty that the Tata Group has approached Tony Fernandes , the Malaysian businessman who owns 49% in AirAsia India, for his approval to acquire AI Express. The shareholders agreement stipulates that the Tatas cannot invest more than 10% in another economic airline without Fernandes being willing to waive the agreement.
People close to development said a new agreement is expected to be signed soon. Instead of the exemption, the Tatas have proposed combining AirAsia India and AI Express. “The merger will give Fernandes a more important move in Indian aviation; therefore, it is a mutual benefit for both partners, said a person with knowledge of the discussions.
AirAsia India took the skies in 2013 as a joint venture between Tata Sons and Fernandes ’airline company, heralding the return of India’s largest conglomerate to aviation, a business it had pioneered through Air India before the carrier was nationalized. Tatas also operate Vistara, a full-service carrier, as a 51-49% JV with Singapore Airlines. Tata Sons chairman has in the recent past told TOI that the company “will not run a third airline unless we merge”. A combination of Air India and Vistara would give the Tatas a monopoly in the full-service space.
AI Express flies to 20 Indian cities and 13 international destinations in the Gulf and Southeast Asia with a fleet of 25 Boeing 737, while the AirAsia fleet of 29 Airbus A320 covers 21 cities across the country.
AirAsia India has been waiting for permission to fly abroad. The wait may be longer since Fernandes, R Venkataramanan, a Tata nominee on the AirAsia board at that time, and several others have been named in cases of criminal conspiracy and money laundering. Fernandes has been summoned by the Execution Directorate on February 5.
It is still unclear whether Fernandes or AirAsia India will be part of the commitment of the Tata-Singapore Airlines alliance by AI; Cases against him could be a problem, according to some people.
However, an offer from Tata-Singapore Airlines will be based on the understanding that the budget airline's business would be in charge of Tatas and Fernandes, a person on the circuit told TOI, adding that the Bombay House deal with Singapore Airlines is just carrier service. The last date to present an expression of interest for Air India is March 17.