Tata Sons, a mega-corporation in India and one of the oldest companies in the sub-continent, and SIA, the parent company of Singapore Airlines, has announced the intention to form a joint-venture airline in India. This is tagged to be a $100 Million venture. This is exciting news. Tata’s actually had started the first ever airline in India, which was subsequently nationalized by the Indian Government and became what is today Air India. Singapore Airline is of course, a well known and respected airline, the world over. One can only expect them to create a product which is truly world class.
The challenge will be first to survive in the tough market in India. While the market is growing rapidly, the airlines operating currently in India have not been prospering. Air India is a bad example, as it has severe management and political issues, but even private airlines are struggling. Kingfisher has gone bankrupt and most other airlines have run up losses. To add to that, the Indian economy is slowing down its rapid expansion.
Furthermore, the Indian government has still not made it’s airline policy clear and well defined, making operating an airline a high risk operation. Last time I flew in India on a domestic flight, more than 50% of what I paid was for taxes and surcharges. That is ridiculous and unsustainable. The government still has a weird policy that requires any airline to operate as a domestic only carrier for 5 years before they get a license to operate internationally. This can really make it tough going for a new airline as the real money is in the international front.
The real win
More non-Indian airlines fly passengers in and out of India than the airlines based in India. There is a joke that Emirates is the National airline of India as it flies more Indian passengers than any other airline! If the new Tata-Singapore airline gets the Government of India to waive or reduce the five year wait period, and get to fly internationally, they can grab a large share of this international traffic. They can have a hub in India, providing non-stop flights the world over, unlike Emirates where one has to go thru Dubai to fly anywhere. Air India is the only airline in India today that has worldwide operations and has its international hubs exclusively in India. Jet Airways has a hub in Brussels, making all its North American and most European flights fly thru Brussels. All other Indian Airlines mostly fly only short haul international flights. This can be a major selling point for international passengers looking for non-stop flights. Singapore Airlines can bring their world class service to the new airline, further adding to its appeal.
…and please join Star Alliance
Air India has been trying unsuccessfully for years to join Star Alliance. Jet Airways has been staying away from Alliances. Kingfisher joined OneWorld and promptly went bust. Having this new airline be a part of an alliance will make it attractive to all those who value flying with an alliance and get the benefits that come from an alliance (read – earn miles and Elite status). As Singapore Airlines is a part of Star Alliance, one would expect Star to be the preferred Alliance.
I believe this airline could succeed and would love to see India produce a truly world class airline, to join Jet Airways. What do you think? What suggestions would you have for the Tata-Singapore alliance? Leave a comment…
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