Central Government on 26 March 2013 cleared AirAsia's proposal to start a passenger airline in India in partnership with the Tata Group.

Centre has cleared the Malaysian budget carrier AirAsia's proposal with the Tata Group with an investment of Rs 81 crore. AirAsia will set up a 49:30:21 JV company with the Tata Sons and Telestra Tradeplace of Indian investor Arun Bhatia to launch a new Indian airline. However the companies are yet to get approval from Ministry of Civil Aviation.

Foreign Investment Promotion Board (FIPB) has already granted its approval which allows up to 49 per cent FDI by a foreign carrier in an Indian airline company. Following the FIPB clearance, the AirAsia JV will now have to approach aviation regulator Directorate General of Civil Aviation (DGCA) for further clearances and a scheduled air operator's permit.

The proposed airline will be located in Chennai and in the initial phase will concentrate on destinations in south India and will also focus on providing connectivity to small towns.