Kapil Kaul, CEO- South Asia of CAPA says Tata may have to clarify its ownership trends in both the airlines. They are just a financial investor in AirAsia, whereas they lead in the JV with Singapore Airlines, which might have to be clarified, he adds.
"I don't know how the regulatory environment would play. That remains an uncertainty", he says in an interview to CNBC-TV18.
Meanwhile, Amar Dubey, Hd- Aviation at KPMG also echoed Kaul's views. He felt that it would be good for international traffic and help in developing New Delhi as a hub. "It should not get into too much of hair splitting over how many subsidiaries and beneficiary control," he adds.
Also read: Govt must return Air India to Tatas: Jitendra Bhargava
Below is the edited transcript of his interview to CNBC-TV18.
Q: This is a surprising move because one had thought that the Tata's would have satiated their appetite for the aviation space after that MoU with Air Asia.
Dubey: We are absolutely positive. We are happy that the India story is in tact and very strong.
The deal is fantastic for the west bound route because the bulk of Indian traffic is on this route. Singapore losses out as nobody is going there and then fly to London. Through this joint venture now they can capture those routes going from India.
It is also good for Delhi Airport as it brings the focus back on Delhi as a hub. Some of the traffic would actually be coming from Singapore to Delhi and gets on long haul flights to Europe and United States.
It might also ease this airline to get into starline given that Singapore is one of the key promoters of the airline so overall fantastic.
Q: We just heard from the civil aviation minister Ajit Singh saying that the Tata's inform him about it. The matter will now be taken up by the FIPB. There wasn't enough clarity on the law on ownership in two airlines; they have a 30 percent stake in AirAsia. They will have a 51 percent stake in this particular joint venture. Can you shed some light on that?
Kaul: Technically it shouldn't be a problem as their role in Air Asia's operations is limited. They are a minority investor with a limited sort of a mandate. It is purely a financial investment.
In this Tata-Singapore joint venture (JV) they are leading it with 51 percent. I don't think there should be any issue which will impact from a regulatory standpoint.
As far as this joint venture is concerned we strongly welcome it, but I don't know how the regulatory environment would play. That remains an uncertainty.
After Jet-Etihad, AirAsia is one of the most robust joint ventures that Indian aviation would see. But I keep putting this caveat on the regulatory uncertainty. That is a big grey area.
Q: Could we possibly see some regulatory overhang as that is exactly what has happened in Jet-Etihad deal and to some extent to the AirAsia deal?
Kaul: There is possibility of a regulatory cognizance and Tatas would need to clarify as per their investments and growth opportunities in both these projects. But, if they have a role where their chairman, one of the Tata Sons executive is the chairman of AirAsia then they might face a regulatory overhang.
Q: But Mr. Ramadorai is the chairman of the AirAsia joint venture.
Kaul: That is what I am saying. They are going to have to get more clarity on both of their investments. The ball seems to be more loaded in their joint venture with Singapore (Airlines) which they were trying to get 16 years back.
They would be more favourable to support the new joint venture announcement today and it could possibly have a regulatory challenge on AirAsia's approval.
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