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Gearing up for takeoff

Will the entry of budget carrier AirAsia lead to a decline in domestic airfares?

Five months after the Indian government opened up the aviation sector for foreign investment, low cost carrier AirAsia has thrown its hat into the ring. It recently announced plans to launch a new domestic carrier in partnership with the Tata group and Arun Bhatia, whose son is married to steel magnate Lakshmi Mittal. The Tata’s group earlier attempts, one in 1990 as a joint venture with Singapore Airlines and the second in 2000 when it considered taking over Air India (again with Singapore Airlines) were thwarted due to policy changes. Ironically, Air India belonged to the Tatas before the government nationalised it and ran it into the ground.