Singapore Airlines may raise its stake in Air India to 40%

SIA had initial talks with the Tata group to raise Air India stake from 25.1%

- Mihir Mishra

Singapore Airlines, or SIA, has expressed its desire to gradually raise its stake in Air India from the current 25.1% to about 40%, three people familiar with the development said.

SIA and the Tata group have had initial talks regarding the potential increase in stake in response to a request from the Singapore-based airline, the people said, requesting anonymity. While the proposal is still at an early stage, Air India may welcome such a move as it will need SIA's expertise to take on market leader IndiGo (InterGlobe Aviation Ltd) in the domestic market and compete with Emirates and Qatar Airways, among other global carriers that cater to Indian fliers travelling overseas.

A higher equity stake will likely make SIA more committed to improving the service standards of Air India through better training and processes. The airline will also play a major role in managing ground services, which include aircraft maintenance. The Tata group, however, will retain majority control and be involved in deciding on the routes and other policy issues.