SIA

SIA: OCBC note that the Indian civil aviation ministry has cleared Tata SIA Airlines Limited (Tata SIA), the India JV between SIA and Tata Sons. The final hurdle is approval from Directorate General of Civil Aviation (DGCA). The house think that Tata SIA will be crucial in growing SIA’s market share in India’s international flight, which is estimated by CAPA to be 4% in FY13. Tata SIA can value-add to SIA on two fronts: 1) serving India domestically from its home market, and 2) using India as a base to serve the region. However, cautious of regulatory hurdles given two previous failed collaboration attempts. Additionally, there are issues such as frequency of flights that will determine the JV’s success. Until there is more colour on the operation permit, the house maintains its HOLD call with $9.50 fair value