Thursday, February 21, 2013

Will Tata be 3rd time lucky as financial investor of Air Asia?

New Delhi: With the announcement of a three-way joint venture to begin a new airline, Tata Sons has heralded its entry into the aviation business. This surprise announcement comes barely a month after Ratan Tata‘s retirement from the helm.
Ratan Tata‘s initial love and subsequent aversion to the aviation business is well known, founded as it was on bitter experiences the group faced not once, but twice, with wayward policy.
The first time was when the Tata group tried to enter aviation by starting an airline in the early nineties in collaboration with Singapore International Airlines (SIA). And then again when he wanted to participate in the strategic disinvestment of Air India, again in collaboration with SIA. Both times, fierce competition and unscrupulous players in the business thwarted Tata’s plans.
According to today’s announcement, Malaysian low-cost airline AirAsia will hold a 49 percent stake in the airline JV, the other two partners being Tata Sons and Arun Bhatia of Telstra Tradeplace. The shareholding of the other two partners is not known.An Economic Times story quoted unnamed Tata officials as saying that their investment in this venture would be purely a financial one. But it still begs the question: why are the Tatas returning to try their luck in the aviation business?
20/02/13 Sindhu Bhattacharya/