AirAsia has received approval of Foreign Investment Promotion Board for setup of new airline in India. The Malaysia based budget airline has jumped in Indian aviation sector by setting up a joint venture with Tata Sons and Telestra Tradeplace. Tata Group was planning to enter aviation sector for quite some time.
After the modifications in FDI policy in September 2012, AirAsia is the first airline to enter domestic aviation sector in India. Domestic travelers in India can expect lower airfares as the new airline company will try to cut the market share of other players.
In Indian domestic aviation sector, Indigo Airlines and GoAir have been doing very good. Jet Airways and Air India are also prominent players in domestic aviation space.
Jet Airways is also looking to expand its base in India with investment from Abu Dhabi based Etihad Airways.
The Tata Sons-AirAsia joint venture company will operate from Chennai. The company will focus on Tier-II and Tier III cities connectivity by air routes. AirAsia will be involved in operations of the airline while Tata Sons will be holding 30 per cent stake in the company with negligible operating role.