Exclusive: Singapore Airlines-Tata Indian jv orders Airbus A320s - sources

Thu Jan 9, 2014 4:56am EST
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By Siva Govindasamy

SINGAPORE (Reuters) - Singapore Airlines has chosen Airbus's A320 (AIR.PA: Quote) to launch its new Indian joint venture with Tata Sons TATA.UL, scoring a victory over rival Boeing (BA.N: Quote) as the airline market in Asia's third biggest economy shows signs of a revival.

Sources familiar with the decision said a project team picked the European plane in preference to Boeing's 737 - the aircraft ordered by low-cost operator SpiceJet SJET.BO to expand its fleet in a deal reported by Reuters on Tuesday.

The demise of Kingfisher Airlines in 2012 marked an end to the bitter competition that led to low ticket prices for Indian consumers and high levels of losses for its airlines.

The subsequent drop in aircraft capacity gave the airlines some breathing space, allowing them to raise fares and return to profitability. Two years later, despite a slowing economy, international and passenger demand has continued to grow.

That, and a liberalization of Indian regulations that now allow foreign airlines to invest in local ventures, means that two new carriers will begin operations in 2014.

TATA SIA Airlines will start flying in the full service segment in the second half of 2014, as will an AirAsia-Tata joint venture in the low-cost market.

"The fundamentals of the Indian market should eventually improve, but patience and initial losses may have to be withstood," the Centre for Aviation, a consultancy, said in a report in September.

Sources said that the SIA-Tata joint venture will get up to 20 A320s worth $1.83 billion at list prices. The planes will be sourced from leasing companies, rather than purchased direct from Airbus.   Continued...

A woman walks past a Singapore Airlines (SIA) logo at a ticketing booth at Changi airport in Singapore May 14, 2013. REUTERS/Edgar Su