New Singapore-Indian airline to get Airbus A320s: official

Singapore Airlines (SIA) has decided to lease 20 Airbus A320s for the launch of its Indian carrier, a joint venture with the giant Tata Group, the new company confirmed on Thursday.

Singapore Airlines chose the A320s over Boeing's 737s and will source the 20 planes from leasing companies rather than buying direct from Airbus, a Tata-SIA spokesman told AFP.

"It's going to be an Airbus A320 fleet. The aircraft will be on lease," spokesman Sanjay Singh said in an emailed statement.

Singh did not disclose the cost of the lease arrangements, which were sealed some 10 days ago, but media reports put the deal at $1.8 billion.

The Tata-SIA airline will likely start flying around July, the spokesman said, after it gains regulatory approval in India.

Indian tea-to-steel conglomerate Tata will hold a 51 percent stake and Singapore Airlines Ltd 49 percent in the new venture, announced in September, as they seek to exploit one of the world's fastest-growing aviation markets.

The airline, which will have an initial combined investment of $100 million from the two stakeholders, marks the third foreign direct investment in the Indian sector since the government declared last year that international airlines could buy as much as 49 percent of local carriers.

The new airline has started recruiting pilots and is finalising its top staff, with a SIA executive expected as its chief.

The Tata Group is setting up another airline venture in India with Malaysia-based budget carrier AirAsia, which is expected to start operations early this year.

In November, Jet Airways said it had completed the sale of a 24-percent stake to Abu Dhabi's Etihad.

India's airline industry is dominated by budget airlines such as IndiGo which has 73 A320s in its fleet. It has placed an order for an additional 180 planes including for A320s and upgraded model the A320neo.

Budget carrier GoAir, which plans to receive 20 A320s in its fleet this year, has placed orders for an additional 72 A320neo planes.

Other private Indian carriers including Jet Airways and SpiceJet are dominated by Boeing aircrafts.

India's aviation sector was once celebrated as a sign of the country's vibrant economy.

Its fortunes faded owing to a range of obstacles ranging from aggressive fare rivalry and rundown infrastructure to expensive fuel, but there is now renewed interest as investors eye the nation's vast aviation market and growing middle class.