Tata Sons on Wednesday announced its plans to invest in a three-way joint venture (JV) with Southeast Asian carrier AirAsia and Indian investor Arun Bhatia of Telestra Tradeplace to establish a new budget carrier.

The upcoming budget carrier, which will be headquartered in Chennai, will be 49 per cent held by AirAsia - the largest budget airline in Southeast Asia by fleet size.  It may be noted here that a foreign carrier can hold a maximum of 49 per cent stake in an Indian airline.

The Tata group and Arun Bhatia will hold 30 per cent and 21 per cent stake, respectively, in the JV.

Speaking about the JV, a Tata Sons executive said, "AirAsia has convinced us about the merits of the JV, as it sees a large underserved market for aviation in India.  It is a big low-cost player in Southeast Asia and expects to replicate its success in India, too."

The Tata group announced the JV less than two months after Cyrus Mistry became the chairman of the salt-to-software group.  Mr.  Mistry's predecessor Ratan Tata had made a similar attempt nearly 18 years ago when he had tried to establish an airline in partnership with Singapore Airlines, but had failed.

Currently, the group has a 1.98 per cent stake holding in SpiceJet, down from 5.82 per cent in the year 2007.

Nearly eight decades ago, J R D Tata had launch Tata Airlines.  But the the airline got nationalized as Air India in 1953, and J R D had been named its first chairman.