AirAsia holds 16.33% stake in the India unit and as per the shareholders’ agreement between the company and Tata Sons, Tata Sons may acquire the former’s stake either directly or through an associate. Sources said that since Air India is now a subsidiary of Tata, AirAsia’s stake has been bought through it.
Air India will buy AirAsia’s 16.3 per cent stake in the airline venture for Rs 139 crore. Tata Sons holds the remaining 83.7% stake in AirAsia India. Air India will also buy it. Tata Sons had on January 27 this year acquired Air India through its 100% arm Talass in an equity and debt deal worth Rs 18,000 crore.
The CCI application is the first step by Tata Sons to integrate its aviation business, which also includes low-cost carrier Air India Express. The proposed acquisition of AirAsia India by Air India will “not alter the competitive landscape or cause any significant adverse effect on competition in India”, read the CCI application.
Airline brands of Tata Sons including Air India, AirAsia India and Vistara (which is a joint venture with Singapore Airlines) – has a domestic market share of 25%, while IndiGo continues to be the market leader with a share of around 54%.
Air India Express is an international budget carrier primarily connecting South India with the Gulf and Southeast Asia. Although AirAsia India started flying in 2014, a year before Vistara started operations, it still does not have the right to fly abroad. Vistara, on the other hand, flies to many foreign destinations such as the UK, Europe, Gulf and South East Asia. As AirAsia prepares to exit AirAsia India, Tata Sons will have to bring that business under one brand.
Meanwhile, Tata Sons is bringing personnel from its aviation units in Gurgaon under one roof, where it will lease 70,000 sq ft of office space.