Home / Companies / News /  Tata Group brings AirAsia India under Air India’s wings

NEW DELHI : AirAsia Bhd exited the Indian budget airline that carried its name, with its majority Indian partner, Tata Group’s Air India, agreeing to acquire the 16.67% stake the Malaysian carrier still owned in AirAsia India for 155.65 crore. According to the share purchase agreement, AirAsia India can continue to use the ‘AirAsia’ brand name for 12 months, the Malaysian company said on Wednesday.

In a separate statement, Air India said that AirAsia India would be merged with Air India Express in about 12 months. The merged entity will be rebranded as Air India Express.

A group co-led by Sunil Bhaskaran, chief executive of Air Asia India and Aloke Singh, chief executive of Air India Express, will help integrate the two airlines. The working group will report to a committee chaired by Air India managing director Campbell Wilson. Air India Express operates short and medium-haul routes connecting smaller Indian towns to the Gulf and Southeast Asia. The Kochi-based unit of Air India has a fleet of 24 aircraft. The Tata group now has complete control of three airlines in India, including Air India, Air India Express and AirAsia India, making it easier for them to share infrastructure across the airlines and save costs. The fourth, Tata SIA Airlines, which operates as Vistara, is a 51:49 joint venture between Tata Sons and Singapore Airlines. However, the Tata Group is also exploring a potential merger of Vistara and Air India and is in “confidential discussions" with Singapore Airlines on the matter. “The Tata Group is working towards getting all four airlines on one platform, with two models - low-cost and full-service. This will help in integration between Air India Express and AirAsia India, the two budget carriers from the Tata umbrella," a senior official said, requesting anonymity.

AirAsia India started operations in June 2014 and currently flies to 18 destinations in India with a fleet of 28 aircraft. It was formed as a joint venture between Tata Sons, AirAsia and Telestra Tradeplace of Arun Bhatia, with equity stakes of 41.06%, 49%, and 9.94%, respectively. The Tata Group gradually increased its share in the airline to 51% by 2019. In December 2020, AirAsia Bhd said it would sell a 32.67% stake in AirAsia India to Tata Sons, including a provision to sell the remaining 16.33% stake. By the end of December 2020, Tata Sons held 83.67% stake in AirAsia India. The airline had a domestic share of 5.9% as of September, according to data by the aviation regulator. On Wednesday, AirAsia Aviation Group Ltd said that the decision to exit AirAsia India was taken after re-examining its strategic objectives after the pandemic. “We have had a great experience working with India’s leading Tata Group. This is not the end of our relationship, but the beginning of a new one as we explore new and exciting opportunities to collaborate and enhance our synergies," Group CEO of AirAsia Aviation Group Bo Lingam said.

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