Within months of entering into a three-way joint venture with Air Asia and Telestra Tradeplace Pvt. Ltd. to start a low-cost domestic airline, the Tata group has now joined hands with Singapore Airlines to launch a full-service airline. Back in the late-1990s, a similar deal was almost clinched but the government of the day dithered and both partners bailed out. At a time when competition in the skies has intensified so much, there must be good reason for the two partners to have come together again to launch a new airline. Evidently, they believe there is potential in air traffic in India — both domestic and international. The Tata group has made it clear that its commitment to Air Asia remains and that the latter was aware that it was finalising a new deal. Tatas will hold a 51 per cent stake in the new airline, which will take quite some time to really take off. Considering that the late J.R.D. Tata was the founder of Air India before it became a government-owned undertaking, a return to the aviation sector makes sense and provides an additional dimension to the expanding Tata empire under a new leadership. Similarly, Singapore, which has been looking at India closely since 1991, finally gets its premier airline to partner a trusted ‘friend.’
While the Jet Airways-Etihad deal focuses entirely on West Asia and Europe, the new partnership will most likely turn its attention towards building momentum towards Southeast and East Asia, as well as the west coast of the U.S. Airlines the world over have understood the traffic and tourist potential of India in particular, and Asia in general. Businessmen, tourists, and students from India are exploring farther and newer destinations. For the Tata group, just as the Air Asia venture should give it a firm footing in the domestic sector by reaching out to tier two and tier three towns, the partnership with SIA will help it establish itself as a vital connector between Indian metropolises and major international routes. Given its reach and reputation, Singapore Airlines is sure to bring value to this partnership. In terms of management, expertise, and facilities, both Tata and SIA could and should provide good value for passengers. Whether or not Kingfisher airlines returns to the skies, it looks like its space could very easily be filled by the proposed airline. It would also make sense for Singapore investors to take up two of the six major airports to be privatised in India, including Chennai, which is a gateway to the East.