Sept. 28--MUMBAI -- Malaysia-based low fare airline AirAsia Group Bhd's chief executive officer Tony Fernandes said that his Indian low fare airline venture with Tata Sons Ltd is likely to be profitable in its first year of operations.
Fernandes said he has no issues with the proposed joint venture between Tata Sons and Singapore Airlines to float a full service airline in the country.
AirAsia India had its first board meeting on Saturday.
Fernandes said on Twitter that he had "superb co-operation between partners" in the first AirAsia India board meeting and he is confident that AirAsia India "will make profit from the first year and change aviation."
"I have and continue to have no issue on SIA (Singapore Airlines) and Tatas. No difference to Ginger and Taj hotels. These are 2 very separate business," Fernandes tweeted on Saturday afternoon.
Ginger is a no-frills hotels chain by Indian Hotels Co Ltd, a Tata Group company, while Taj Hotels chain is a premium hotel service.
On 21 September, Mint had reported that Fernandes had no issues with the Tata Sons-Singapore Airlines venture and that Tata Sons had informed him about the full- service airline plans at every point.
Fernandes's comments came immediately after his partner Arun Bhatia of Telestra Tradeplace Pvt said the Tata-Singapore venture was a shock to him and he was not kept in the loop.
Tata Sons and Singapore Airlines on 19 September had 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.
Tata Sons, the holding company of the tea-to-telecom Tata group, and SIA had signed an agreement and applied to India's Foreign Investment Promotion Board (FIPB) for approval to set up the new airline.
Tata Sons will own 51% and SIA will own 49% of the proposed joint venture, to be based in New Delhi.
This was surprise given that Tata Sons has already agreed to join a venture with AirAsia Bhd and Bhatia of Telestra Tradeplace to form a local low-fare airline that's waiting for the Directorate General of Civil Aviation's final go-ahead.
AirAsia has a 49% stake in that venture, with Tata Sons taking 30% and Bhatia holding the rest.
"Just finished a great Board meeting as expected. Buzzling with ideas and raring to get going," tweeted Mittu Chandilya after the board meeting on Saturday.
Chandilya had hinted that AirAsia India is looking at launching by end of this year.
AirAsia India's first board meeting comes at time when IndiGo , India's largest airline by passengers carried, last week reported a more than sixfold increase in profit to Rs787 crore for 2012-13 -- the low-fare airline's fifth consecutive profitable year. Revenue rose 65.4% to Rs9,458 crore, according to data submitted to the Directorate General of Civil Aviation.
In the quarter ended June, Indian airlines, excluding the grounded Kingfisher Airlines Ltd, lost nearly $200 million, though low-fare airlines posted small profits in the range of $40-50 million, according to consultancy firm Centre for Asia Pacific Aviation, or Capa.
For the quarter ending 30 September, Capa in a mid-August report estimates industry losses to increase to $400-450 million because of the rising cost of operations that pushed up fares and kept away passengers.
"It shows (that) you can make money (in India)," Ferndandes told Mint.
Fernandes did not disclose details of how his airline in India is going to make money.
In a last week statement, AirAsia India said it is confident that it will be able to replicate the success of its counterparts in Malaysia, Thailand, and Indonesia; and enabling people to fly affordably through superior operational performance by emphasizing a focused and disciplined cost structure will tremendously benefit the Indian consumer.
The airline currently has a fleet of three Airbus A320 aircraft and over 200 staff at the moment.
AirAsia India has already received no-objection certificate from civil aviation ministry and is working towards securing the Air Operating Permit from the Indian aviation regulator.