SIA-Tata JV approval likely to be delayed

Here's the reason why.

OCBC Investment Research attended the 3QFY14 post-results briefing for Singapore Airlines (SIA) and here are its key takeaways. Management is optimistic the TATA SIA JV will be given approval soon.

However, it is likely to be later than its last guidance of mid-2014.

Here's more from OCBC:

In a similar story of aviation JV in India, AirAsia’s JV with Tata was expected to be operational by Dec-13 after initial approval by the Indian government's foreign investment regulator in Mar-13.

But until now, it is still awaiting final clearance with Directorate General of Civil Aviation (DGCA), India's aviation regulator.

Another regulatory uncertainty is whether the rule for airlines to have a 20 aircraft fleet and five years of domestic operations before being allowed to fly internationally will be lifted. This will decide how fast the JV, if licensed, will be able to tap on the growing Indian market for international flights on top of domestic ones.

We see it as a strategic alliance to break into India’s growing market, noting that as of 2013, SIA only has less than 4% market share of India’s international flights according to CAPAS.