Air Asia flies into India with Tatas on board

1. Malaysian budget carried to hold 49% in JV, Tata to own 30% and Bhatia family 21%.
2. Tony Fernandes, a well-known entrepreneur whose successful turnaround of a failed
government airline in Malaysia led to Pan Asian regulatory changes and the creation of the
continents biggest low-fare carrier, is entering India in partnership with the Tata Group and
relatives of steel baron Lakshmi Mittal.
3. Air- Asia, Asias biggest no- frills airline by fleet size, will hold 49% in yet- to- be named
airline , with Tata Sons,the holding company of the Tata Group, owning 30%, Telstra
Teleservices, promoted by the Bhatia family , one of whose sons is married into the Lakshmi
Mittal family , will hold the remaining 21%.
4. The move which is seen as big vote of confidence in Indias new vote of confidence in Indias
new liberal aviation policy is, however, expected to worsen the industrys domestic
competitive environment and comes just as airlines are enjoying a period of growth and
profitability after the severe price wars of the past two years.
5. The deal however poses a significant risk for the industry, especially Spicejet and Jet
Airways, which have just returned to profitability.
6. AirAsia will initially target the same flyers as that of SpiceJet- businessman, holidays
travellers and family members travelling to Singapore and Malaysia from Chennai, which will
be AirAisa headquarters. The network will then expand to other cities and towns. Fernandes
said he is specially targeting tier-II and tier- III cities.
7. The year will be tough for Airline companies as traffic is going down and fares cannot be
increased. Amrit Pandurangi, senior director at Deloitte Touche Tohmatsu India, said. If
AirAsia plays the market and starts the low-fare game, it will make the entire sector blee
further.
8. They will kill the small players in the Indian market because they will have no issues with the
capital required, a senior executive of rival airline said.. But for the sector, it is fantastic as a
well-oiled airline like AirAsia will make the system efficient, he added.
9.