The Tata Group now owns 100% of AirAsia India Pvt Ltd (AAIPL), after purchasing the remaining 16.3% stake in AirAsia Berhad for $19 million.
Sunil Bhaskaran, MD & CEO of AAIPL, announced in an internal memo to employees on Wednesday that the company is now a 100% subsidiary of Air India.
This opens the door for AAIPL to merge with Air India Express, forming a large low-cost entity under the Tatas. Concurrently, talks are underway between Singapore Airlines (SIA), which owns 49% of full-service Vistara, and Tatas (51% owner of Vistara), to merge Vistara airline with Air India.
Following the acquisition of AirAsia India, AI Confirmed that Air India Express and AirAsia India will be merged into a single low-cost carrier within 12 months. The Merged entity is to be rebranded as Air India Express.
The agreement comes as AirAsia makes its strongest-ever return to the skies in the aftermath of the pandemic, which allowed the airline to review its strategic goals and narrow its focus on ASEAN, given its robust network and large presence in the region.
Bo Lingam, Group Chief Executive Officer of AirAsia Aviation Group said;
“Since 2014, when we first commenced operation in India, AirAsia has built a great business in India, which is one of the world’s biggest civil aviation markets in the world. 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 moving forward,” added Mr Lingam.
Following the announcements made on December 29, 2020, and January 5, 2021, regarding the disposal of 32.67% equity shares in AAI, the company announced the sale of the remaining 16.33 per cent of AirAsia’s equity shares to Air India Limited, a subsidiary of Tata Sons Private Limited, in a deal worth approximately $19 million.
In January of this year, Tata Sons acquired Air India through its wholly-owned subsidiary Talace for Rs 18,000 crore in equity and debt.
Air Asia India was India’s fifth-largest airline, with a total market share of 5.7%; with the acquisition by Tata-led Air India, the entity will have a combined 15.7% share of the country’s domestic passenger market.