As per the report of Economic Times, the Tata Group is planning to merge low-cost airline AirAsia India with Air India Express, the subsidiary of Air India Limited which is now under the ownership of Tata.
The development comes after the Tata Group successfully bought Air India from the government at an enterprise value of ₹18000 crores.
The move is aimed at achieving operational synergies and cutting operational costs, reported ET after speaking with top executives close to the development.
It must be noted that the decision to merge has been taken by the Tata Group as it owns an 84 percent stake in AirAsia India and paves the way for a quick merger.
However, Tata Sons is yet to finalize talks with Singapore Airlines (SIA) on integrating the schedules of Vistara and Air India.
Notably, the Tata group owns a 51 percent stake in Vistara, and Singapore Airlines has held the rest 49 percent.
As Tata owns a majority stake in AirAsia India, making way for easier integration. The Tata group had plans to create a single airline entity for a long time and it can now move forward with it after successfully acquiring Air India.
The ET reported Tata Sons has held several meetings in recent weeks with senior management of AirAsia India and Air India to discuss the integration of staff, aircraft-quality, and safety checks among other matters.
The sources quoted in the report also confirmed that external integration specialists were part of the meetings as well.
However, Tata Sons have not officially confirmed the development, nor has it commented on the merger.
Tata group-owned Talance Private Limited had secured the bid to own 100 percent of Air India and its subsidiary Air India Express on October 8. The acquisition is likely to be completed by the end of the year.
The plan to create a single aviation unit could give the conglomerate a major advantage in the Indian aviation space. The creation of an umbrella for all its airline businesses would not only lead to better cost management but also help it offer a wider range of services under a unified brand.
(With Inputs From Economics Times)