LONDON – Air India, the Indian flag carrier and recently privatized airline taken over by Tata Sons Private Limited has bid to take over Air Asia India, a low-cost carrier of Tata and Air Asia, which has predominantly served domestic routes in India since its inception in 2014.
The Plan…
TATA sons have recently filed their application with the Competition Commission of India (CCI), showing the willingness of TATA owned Air India to buy the entire equity share capital of Air Asia India, where Tata Sons holds 83.67% of the equity share capital in comparison with that of AirAsia investment Ltd, part of Malaysia’s AirAsia Group owns 16.33% share.
With the ambitious plans for TATA sons to consolidate all four carriers under its wing into a single subsidiary, TATA sons have proposed to buy out Air Asia India thus helping them to reach their desired goal.
The notice issued by CCI, which marks the first successful step towards consolidation, states that:
“The Proposed Combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined.”
But CCI has identified a possibility of overlapping in operations in certain markets if the deal is given green light ahead, which will further be reviewed by the CCI members by the time it reaches conclusion.
Giving their input on this deal, Vinamara Longani, Head of Operations at Sarin & Co. Law firm specializing in aircraft leasing and finance said:
“This was on expected lines as it makes no sense for the Tata Group to own stakes in separate airlines.”
Challenging Realignment Ahead…
Mr. Longani further concluded that “The Tata Group has embarked on what will go down in history as possibly one of the most challenging airline realignment or turnarounds.”
After Air India was sold to TATA by the government of India under its privatization drive, which cost TATAs more than US$2.4 billion in equity and debt deal, which included full-service carrier Air India, the low-cost arm of Air India Express, cargo service AI SATS and ground handling wing, TATA has now embarked on bringing Air Asia India under Air India’s wings.
While Air India enjoys lucrative slots around the globe and in its domestic markets, TATA is facing an enormous task in upgrading and face-lifting Air India’s image. Under which the airline is expected to undergo fleet upgrades, and financial and service level improvements.
Speaking on this occasion, TATA Sons Chairman, N. Chandrasekaran said that “We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline.”
Air India, the state-owned Indian flag carrier was recently privatized by the government has been bought by the TATA sons, the auto to steel conglomerate based in India.
Air India currently has more than 127 fleets of mixed varieties with 102 destinations served domestically and internationally from its prominent hubs at Delhi and Mumbai.
With the recent takeover by TATA sons, the airline is expected to undergo massive fleet, service, performance, and image upliftment.
