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Initial discussions to this end began, even as the conglomerate approached another agreement to acquire a stake in the second largest Indian airline, Jet Airways, with its founder Naresh Goyal.
The Tata group's holding proposes to "leave AirAsia India and run the only full-service private airline in India, Vistara-plus-Jet," said one of its collaborators. Tata Sons owns 51% of AirAsia India, the rest being held by Malaysia-based AirAsia Bhd.
Tata Sons, AirAsia and Singapore Airlines declined to comment on what they said about speculation.
It will not be easy to find a buyer for the stake in Tata, given the small size of AirAsia India, its expansion to the pace of snails, its losses and, most importantly, the Central Bureau of Investigation (CBI) investigation into allegations of lobbying and irregular transactions by AirAsia Bhd Tony Fernandes, CEO, and other AirAsia executives. Alternatively, Fernandes could look to sell, said one of the people.
"With the lawsuits against him, Tony has more and more difficulty doing business in India," said one of the officials. "But he will not leave without getting a good value for the participation of his airline."
One of the options being considered is to create a full-service brand – Vistara, merged with Jet – and an equivalent of SIA's low-cost carrier Scoot, which last year absorbed budget carrier Tigerair. Nevertheless, acquiring AirAsia India completely may not make much sense for the Tatas.