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Business News/ Companies / News/  Tata SIA airline venture aims for first flight in October
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Tata SIA airline venture aims for first flight in October

The airline will send its application to aviation regulator DGCA for a permit, which can take more than three months

Tata SIA Airlines Ltd is the joint venture of Tata Sons and Singapore Airlines. Photo: BloombergPremium
Tata SIA Airlines Ltd

is the joint venture of Tata Sons and Singapore Airlines. Photo: Bloomberg

New Delhi: Tata SIA Airlines Ltd, the joint venture between Tata Sons Ltd and Singapore Airlines Ltd (SIA), expects to start flights in India in the Hindu festive month of October, having secured a no-objection certificate from the aviation ministry to begin operations.

The airline plans to launch flights in early October, a person familiar with the plan said on condition of anonymity.

The airline was granted a no-objection certificate by the aviation ministry last week—the most critical step in the process of obtaining an airline permit from the Directorate General of Civil Aviation (DGCA). It secured approvals from the home ministry and the foreign investment promotion board earlier.

Tata SIA Airlines will join Air India Ltd, Jet Airways (India) Ltd, IndiGo, SpiceJet Ltd, GoAir and Air Costa in India’s airline industry.

It will time its entry with the start of what is traditionally the most profitable period for airlines in India. The October-December quarter, which includes festivals like Dussehra, Diwali and Christmas and the year-end vacations, is peak travel season.

The grant of an airline permit by the DGCA can take more than three months and is subject to the airline having in place the required technical capabilities, staff strength, engineering set-up, and operational and security procedures.

The airline has said it will soon send its application to the DGCA for an airline licence.

The airline is working on multiple elements simultaneously under its new chief executive officer-designate Phee Teik Yeoh, who moved to India from Singapore Airlines late last year for the joint venture.

Yeoh is supervising a 20-member Tata SIA Airlines team from a hotel suite in Gurgaon, on the outskirts of Delhi, as the company searches for office space that’s close to Indira Gandhi International Airport’s swank Terminal 3, which will be the airline’s hub.

Tata Sons, the holding company of the $109 billion Tata group, has a 51% stake in the airline and Singapore Airlines the remainder. The joint venture entails an initial investment of $100 million. Most of the top level hiring is almost over. Most positions critical to the airline will be filled by personnel from existing Tata group companies and Singapore Airlines.

These include chief financial officer Niyant Maru, ex-CFO at Tata Realty and Infrastructure Ltd. Chief human resources officer Varadarajan Srinivasan has moved from Tata Teleservices Ltd. The position of legal head is sill open.

Positions relating to airline expertise have been filled by personnel from Singapore Airlines. Besides Yeoh, senior vice-president for operations Roshan Joshi has moved from Singapore Airlines.

The airline is also hiring a chief strategy officer, whose name is yet to be made public because the person is still serving the notice period in another airline.

The airline has made offers to senior pilots, who typically have a longer notice period of six months to serve to join another airline.

Since the airline will be using the Airbus A320s, 20 of them on lease to start with, it is likely to source most of its technical workforce like pilots and engineers from IndiGo, Air India and GoAir, which use the same aircraft.

In pilot recruitment, Tata SIA Airlines will be competing with Etihad Airways PJSC, which has started hiring A320 pilots from India, promising them a promotion to flying bigger jets like the Airbus A380 and Airbus A330 besides better perks as inducements, according to a person who was present for these interviews in Gurgaon in March and spoke on condition of anonymity.

Tata SIA Airlines is also conducting a so-called a product service positioning study of Air India, Jet Airways and also no-frills airline IndiGo to see how it can improve on them.

Tata SIA will also offer in-flight entertainment systems, a choice of meals, a loyalty programme and lounge services to passengers.

To be sure, full-service airlines have had it rough in the Indian market so far.

Vijay Mallya’s Kingfisher Airlines Ltd won many awards internationally and locally for its five-star services, but was eventually grounded in October 2012 under the weight of heavy debt and accumulated losses.

Its first full fiscal year loss was 577 crore in 2006-07. By 2012-13, its annual loss widened to 4,301 crore. Its accumulated losses ballooned from 1,200 crore to 16,023 crore in the same period.

An analyst said the initial years will be a honeymoon period for Tata SIA, like for other airline start-ups.

“Tata SIA will see a honeymoon period for one to three years like Kingfisher Airlines did and then financials will start telling the real story of how the airline was executed," said New York-based former Jet Airways CEO Steve Forte. “The more efficient the management, the longer the honeymoon."

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Published: 07 Apr 2014, 08:32 PM IST
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