KUALA LUMPUR
Malaysia AirAsia, Asia's largest budget carrier, said on Wednesday it is seeking approval to a joint venture with respect to non-listed Indian companies Tata Sons Ltd and Telestra Tradeplace Pvt Ltd.
"We have carefully evaluated developments in India the past couple of years and we are convinced that the current climate is perfect for our low rates," AirAsia chief executive Tony Fernandes said in a statement.
AirAsia, via the investment arm, AirAsia Investment Ltd., owns 49 percent of the new airline with the remaining interest held by the two Indian companies. The company wants to operate from Chennai and offer domestic flight options, said AirAsia.
The news comes after the carrier denied last year that was the offer for a stake in SpiceJet Ltd, the nation's largest budget airline.
India's airline industry, which has given the continued losses due to high operating costs and regulatory uncertainty, was opened to foreign investors in September last year. Foreign carriers are now able to buy up to 49 percent of the local airlines.
No foreign airline has bought a stake in a local carrier as India relaxed investment rules. The UAE's Etihad Airways is in talks to buy a stake in Jet Airways, but has reached no agreement. Sources earlier said it makes more sense for foreign carriers to start an airline with a local partner, so they dont have to assume the debt of an existing Indian airline.
AirAsia currently flies to the four South Indian cities and Kolkata next to 20 countries in Asia and has indicated that it plans to slow its overall expansion elsewhere.
AirAsia X, the long distance carrier found by Fernandes, last year withdrew from India due to poor demand and profitability.
India's two largest cities, Mumbai and Delhi, were adapted from the AirAsia network last year due to a non-local distribution access lines, according to market researcher the Centre for aviation (CAPA).
"Securing the right local partner can solve many of the challenges of AirAsia in serving India's domestic markets," CAPA said in a report.
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