SIA and Indian group make tieup on airline

SIA and Indian group make tieup on airline

NEW DELHI (AFP): India's industry ministry has apparently cleared the way for Singapore Airlines (SIA) to tie up with the country's Tata group to launch an airline here, the Press Trust of India (PTI) said yesterday.

The ministry cleared the controversial venture on grounds that "no good proposal ... of such a mega nature should be held back," the news agency quoted an unidentified official as saying.

The proposed SIA-Tata tie-up, opposed by India's civil aviation ministry, would lead to the country's largest private airline in terms of equity.

The US$708-million joint venture, provisionally approved after 18 months of wrangling, needs further approval from the cabinet of Prime Minister H.D. Deve Gowda.

It was cleared earlier by the Foreign Investment Promotion Board (FIPB).

Earlier governments in New Delhi refused to let the FIPB clear it despite requests from Singapore and the Tatas.

The joint venture is to have 60 percent Indian participation. Singapore Airlines would control the rest of equity. The project involves buying 19 aircraft -- with spares, maintenance equipment and other facilities -- for around 630 million dollars during the first five years.

It would begin with a route network of 13 sectors, which would be raised to 28. The airline would initially employ some 2,500 people.

The Tatas have maintained that the carrier would be an Indian airline and the collaboration with Singapore Airlines was sought only "with a strong desire to give India a world class domestic airline."

New Delhi first rejected the tie-up in August 1995, citing "inadequacy of necessary information, aircraft type not conforming to government policy, non-submission of security plan and non-acceptability of base of operation."

Many of India's fledgling private airlines had also come out against the entry of the Singapore carrier. It also met with opposition from state-owned Indian Airlines and Air India.