Tata Group To Cover Aviation Value Chain

Sept. 30–MUMBAI — Rather than restricting itself to just running airlines in India, the $100 billion Tata Group plans to start businesses in the entire aviation value chain that would include operating airports, building an aircraft repair and maintenance facility and developing an information technology backbone for aviation services.

The group has plans to leverage group companies to establish and support its broader interests in Indian civil aviation, according to a person close the development. He spoke on condition of anonymity.

“The Tata Group already has interests in catering, airlines, aircraft engineering and IT support,” he said. “It will also enter airport sector to compliment its interests in Indian civil aviation industry. It has plans to enter aircraft repairing facilities in the long run.”

The group has bought global tender documents of the Chennai and Lucknow airport modernization programmes, Tata group executives said on condition of anonymity.

On 19 September, after being thwarted twice by political and corporate intrigue, Tata Sons Ltd and Singapore Airlines Ltd (SIA) teamed up for a third time to jointly enter the Indian aviation market with a proposal to invest $100 million in a full-service airline based out of New Delhi.

Tata Sons, the holding company, and SIA have signed an agreement and applied to India’s Foreign Investment Promotion Board (FIPB) for approval to set up the new airline, in which Tata Sons will own 51%.

The development surprised the market because Tata Sons had already agreed to join a venture with Malaysia-based AirAsia Bhd and Arun Bhatia of Telestra Tradeplace Pvt. Ltd to form a local low-fare airline that’s waiting for the Indian aviation regulator’s final go-ahead. AirAsia has a 49% stake in that venture, with Tata Sons taking 30% and Bhatia holding the rest.

The Tata Group has over 100 operating companies in seven business sectors including communications and information technology, engineering, materials, services and consumer products.

“Many of the group companies are expected to offer inputs and businesses to its aviation aspirations,” said the person cited earlier.

Tata Group is also into air catering through TajSATS Air Catering Ltd, a joint venture between Indian Hotels Co. Ltd and SATS, formerly known as Singapore Airport Terminal Services. The group is yet to formalize a broader strategy in aviation but will look at related sectors, including aircraft repairs and other facilities as and when there is a business case, a Tata Group executive said, declining to be named.

“There are Tata companies in the infrastructure space. Airport-related projects fall within their interest areas, and they can and do consider participating in such projects,’ a Tata Group spokesperson said in an emailed response. “As for Tata’s possible interest in areas adjacent to civil aviation, we would not wish to speculate about any new activities and would merely say that any opportunities that present themselves will be considered on merits.”

Tata Projects Ltd and Tata Realty and Infrastructure Ltd are eyeing airport projects in India from a purely engineering, procurement and construction (EPC) perspective. Airline firms are barred from taking an equity stake in airport companies.

The group is expected to take part in several other airport projects, including Navi Mumbai International Airport, which is coming up in Mumbai, said the first person cited in this report.

Tata Group To Cover Aviation Value Chain