The planned entry of Singapore Airlines into the Indian market through a tie-up with Tata Sons could provide the airline a foot-hold in one of the most under-penetrated markets globally.

One needs to step back a little to understand Singapore Airline’s need to find a partner in India. In April, India and Singapore concluded a successful air services bilateral exchange which increased the number of seats that designated airlines could operate between the two countries by 2,160 a week.

The exchange with Singapore was a drop in the ocean as compared with what was exchanged with Abu Dhabi – 50,000 seats in a phased manner over the next three years from the current level of 13,600.

All these developments came in the back drop of a July 2012 request by visiting Singapore Prime Minister Lee Hsien Loong to India when he asked India to further liberalise its air services agreement with Singapore.

Possibly a combination of these factors provided just that little push to Singapore Airlines to go ahead with the marriage with Tata Sons after three unsuccessful attempts over the last two decades.

Some analysts feel that the real reason Tata-SIA decided to take the plunge now is the realisation that it is a matter of time before the domestic aviation sector booms again and that Indian States are slowly beginning to understand the economic benefits that greater air connectivity brings.

Currently, States charge a very high rate of sales tax on aviation turbine fuel which averages close to 30 per cent on an all-India basis. But this is changing with at least some States including Jharkhand, West Bengal and Andaman lowering it to enhance air connectivity.

The entry of SIA along with Tata Sons shows that both the companies are firm believers in the adage “tough times do not last, tough people do”, said a senior official with a Gulf carrier based here.

So what does this marriage mean for a SIA? Probably the best way to answer this will be by looking at Etihad’s buy-out of a stake in Jet Airways.

Jet announced that Abu Dhabi will become a “gateway” for its flights to various global destinations including US, Canada and Europe, soon after its deal with Etihad. Perhaps Tata-SIA is also looking at a similar arrangement.

Given India’s strategic location, which falls in the middle of traffic flows from Far East and Europe, the tie-up could provide an opportunity for Delhi, Mumbai and even Chennai to become transit hubs for the new airline.

What should also not be forgotten is that Singapore’s Changi airport was initially interested in tying up with the Airports Authority of India for operating and maintaining Chennai and Kolkata airports.

Using cities in India as hubs will ensure that Tata-SIA can fly passengers from the interior parts of India to major gateways such as Delhi, Mumbai, Chennai, Bangalore or even the smaller cities to which Singapore Airline flies and then offer them connections to the Far East or Australia and New Zealand or even the US.

>ashwini.phadnis@thehindu.co.in

Related Topics
comment COMMENT NOW