'Key to long-term growth': Temasek backs Singapore Airlines’ Air India bet amid investor scrutiny

Singapore state investor Temasek on Saturday backed Singapore Airlines’ investment in Air India, saying the Indian carrier can play a key role in the airline’s long-term growth strategy despite scrutiny over its exposure to the loss-making airline.

Temasek, the majority shareholder of Singapore Airlines, said the investment in Air India would help the Singapore-based carrier deepen its presence in India, the world’s third-largest air transport market after the US and China.

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Singapore Airlines, which owns around 25% of Air India, has identified establishing a second hub outside Singapore as a long-term growth objective. Temasek said India was well positioned to serve that purpose, given the size and growth potential of its aviation market.

“Singapore Airlines has demonstrated discipline and resilience through industry cycles, and consistently positioned itself for long-term growth,” Temasek said in a letter to The Business Times.

The comments come after scrutiny of Singapore Airlines’ investment in Air India, including an August 27 opinion article in The Business Times that questioned the airline’s exposure to the Indian carrier.

Singapore Airlines has had a presence in the Indian market for years, including through Vistara, the full-service airline it operated in partnership with the Tata Group. Vistara was merged with Air India in 2024, creating a larger full-service airline under the Tata Group.

Temasek said Singapore Airlines’ investment in Air India should be viewed from a long-term perspective. It acknowledged that transforming Air India would involve complex, multi-year operational and integration challenges.

“Efforts of this scale take time and are not expected to be linear,” Temasek said, pointing to factors such as aircraft innovation, fleet renewal cycles, airspace disruptions, geopolitical developments and fuel price volatility that can affect the aviation industry.

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The Singapore investor said it supported Singapore Airlines’ strategic moves to position the airline for long-term growth and global competitiveness.

Air India, owned by the Tata Group, has been undergoing a major transformation since the conglomerate took control of the airline from the Indian government in 2022. Singapore Airlines holds a stake in the enlarged Air India group following the Vistara merger.

Temasek said it recognised the challenges involved in the transformation but maintained that such initiatives were important for sustaining growth over the long term.