More Cheap Flights in Offing-Thanks to Tata JV AirAsia

It was the FDI deal hardly anyone was expecting. When the speculations were rife with the Jet Airways and the SpiceJet airlines to be in talks for FDI with the Emirates-based airlines, the Tatas have emerged as the unlikely candidates for having really pulled the plug. More interesting is the fact that the Tatas do not have their own airlines but have firm plans for a short-haul one. Their partners in this joint venture would be AirAsia, the world renowned LCC of Malaysia that is famous for its cheap international flights and the Bhatias of Delhi who are relatives of steel magnate Mr. L N Mittal.

It is quite interesting to note that the Tata brand under Mr. Cyrus Mistry has taken up this new business line which was not considered profitable enough by his predecessor, Mr. Rata Tata. With the domestic aviation already being considered a death knoll for the carriers and IndiGo and SpiceJet already operating neck to neck, one is bound to wonder how Tatas will position themselves in this competitive environment. The case of Kingfisher is still very much alive in memories.

At the same time, the Civil Aviation Minister of India, Mr Ajit Singh, has said that the Tata group could have developed their own domestic carrier rather than entering into joint venture with AirAsia. He has also outlined that India needed more of those carriers which can fly to far-off destinations rather than being singularly obsessed with the short-haul international flights of LCCs to the nearby countries. Quite clearly, the Minister seems to be echoing the intention of the government to have carriers that fly to long-distances across the globe. For him, this deal of Tata group which would seek investment in yet another LCC, could have been improved by inviting FDI in long-range, full-service carriers.

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