SIA expects to be third time lucky in India

Singapore Airlines (SIA) is confident its Indian venture will take off in its third attempt to crack the Indian market, said chief executive officer Goh Choon Phong.

The environment has changed since the last time it teamed up with Indian conglomerate Tata to start a new venture.

After years of shutting out foreign carriers and investment, India did a U-turn in September last year, passing a new law that allows foreign airlines to take equity stakes of up to 49 per cent in local carriers.

The jointly owned carrier will be based in New Delhi, and is expected to take to the skies by the middle of next year, according to Tata. Three weeks ago, the proposal for SIA to take a 49 per cent stake, with Tata absorbing the remaining 51 per cent, was approved by India's Foreign Investment Promotion Board.

The next step is to file the relevant documents with India's Transport Ministry and civil aviation authority.

On whether he expects any hurdles in the way, Mr Goh said: "We have received very good response from both the Indian public and the authorities so we have no reason at this point in time not to believe that it will take off."

He was responding to a Straits Times query at a meeting with reporters and analysts on Wednesday, a day after the airline reported a 78 per cent jump in July-September net profit to $160 million.

Previous attempts by the SIA-Tata team to bid for the Indian travel market were thwarted by fierce political opposition and local carriers crying foul.

SIA is eager to move in, given the market's strong potential, Mr Goh said.

With 430 million Indians aged between 15 and 34 and a middle-class population expected to hit 550 million by 2025, the demand for travel is high and will continue to soar, he said.

However, aviation experts such as Mr Tony Tyler, chief executive and director-general of the International Air Transport Association, have sounded warnings about the tough operating conditions, which include high taxes and poor infrastructure.

Last year, all but one Indian carrier lost money.

SIA, which also has a 20 per cent stake in Virgin Australia, believes it can succeed in India.

Mr Goh said: "By no means do we think this is going to be a walk in the park.... We don't take the challenges lightly, of course, but if we were not confident we could make it work, we would not be there.

"As with any venture, there will be risks but we believe it is acceptable, given the potential and the benefits that we can see."

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