He does not see the venture hitting any roadblock ahead of the last few clearances like a no objection certificate (NOC) from the government followed by a Scheduled Operator's Permit (SOP) from Directorate General of Civil Aviation (DGCA). The entire process would not take more than six months, believes Kaul.
Moreover, he thinks it is critical for other airlines like SpiceJet , Go Air etc to have such kind of joint-ventures so that they are well capitalised not only to finance their losses but also to have working capital.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: FIPB has cleared Tata-Singapore Airlines JV. Was this on expected lines? What other clearances are now required?
A: The clearance was expected and we had said so in our report released a couple of days back. We had indicated that the FIPB approval would go in the first shot. I am glad that happened. It is an important milestone for that airline. Now they would move to the next regulatory clearances which are to deal more with the Ministry of Civil Aviation.
The first would be to getting the no objection certificate (NOC) from the government and that roughly should take 2-3 months and post that they would need to go to Directorate General of Civil Aviation (DGCA) for a Scheduled Operator's Permit (SOP) where they would need to go through series of preparedness meetings.
My expectation is that by end of January-early February, we could see them getting an NOC which will then set up a 6-8 months timeframe for the airline to start.
Q: Are there any riders to the deal that you would be watching out for or the approval of the joint venture?
A: I do not expect any challenges to the deal because now they only have to get the security clearance approvals, submitting a business case through the DGCA. So, it is a normal process of getting NOC and after that SOP. My own indication is that within next six months they should be able to get both the NOC, as well as the SOP.
Q: After you get the NOCs etc. how long will it take for the airline to be operational?
A: Given the fact that they have a very high level of professional expertise they should not take more time for the preparedness meetings with the DGCA post the receiving of the NOC. That should possibly be even 30-60 days. My assessment would be within 30 days, because they have the capability to go through the preparedness meeting quite quickly because they have the know-how.
NOCs probably take time because you need to get the Director of Security clearances and they need you to submit manuals and other things.
My sense is that it will take 2-3 months for NOC, then about a couple of months for the SOP and within six months they should get the permission to fly.
Q: Do you expect this airline to become a formidable player early on or will they consolidate and then expand?
A: Knowing Singapore Airlines, they would bring lot of preparedness and I think they would do a major expansion. They would not jump without having the fundamentals in place.
However, it is a game changing project because this is a milestone project in the Indian aviation. The FIPB approval shows government's intent to move the economy forward.
Q: With large names like SIA, Etihad, who have deep pockets getting into Indian aviation space do you think other lines like SpiceJet etc will have to go ahead and tie up with a JV because the market conditions now will necessitate that?
A: I think this is critical for SpiceJet and to some extent other airlines which are in the market to make sure they are well capitalised. Not only in the interim to finance their losses but also have growth capital. It is critical to have secure funding position and that is key for both SpiceJet and perhaps GoAir.
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