Tata said Malaysia’s Air Asia, its partner in the low-cost carrier (LCC) Air Asia India, is fully aware of its deal with Singapore Airlines. “Air Asia has no objection to the deal,” said a Tata Sons spokesperson.
The company said that the two ventures will have separate focus as the partnership with SIA will operate in the full-service segment, and not in the LCC space.
But some industry observers said they are concerned about the future of Air Asia India, considering the regulatory hurdles faced by it so far and the delay in starting operations.
“This announcement could play out negatively on Air Asia’s regulatory approval as Tatas have a 30% stake in the JV,” said Kapil Kaul, CEO, South Asia, the Centre of Asia Pacific of Aviation (CAPA).
Analysts said that the differentiated strategies between the two joint ventures will be the key to ensure that they do not end up competing with each other.
“This deal may create some problems in the Tata-AirAsia JV. We expect clarity to emerge over the next few weeks. Questions are being asked about the Tatas entering into two separate JVs. As long as there is no violation of FDI norms and national security, these deals are best left to the companies involved and market forces,” said Amber Dubey, partner and head - aerospace and defence at consultancy firm KPMG.
Air Asia is expected to start operations by October this year.