Tata Group-owned Air India has proposed to buy out the entire equity share capital of low-cost carrier AirAsia India, in which Tata holds a majority stake, to merge into a single airline, according to an application with the Competition Commission of India. .
The auto-to-steel conglomerate bought state-run carrier Air India in a $2.4 billion equity-and-debt deal, reclaiming ownership of India’s leading carrier after nearly 70 years.
Tata Sons holds 83.67 per cent stake in AirAsia India.
“This was on expected lines as there is no point for the Tata group to hold stake in different airlines,” said Vinmara Longani, head of operations at Sarin & Co, a law firm specializing in aircraft leasing and finance.
“The Tata Group has embarked on what will go down in history as possibly one of the most challenging airline restructurings or turnarounds.”
While Air India has lucrative landing slots, Tata faces an uphill task of upgrading the airline’s old fleet and transforming its financials and service levels.
According to the Competition Commission of India (CCI) application, “the proposed combination will not alter the competitive landscape or cause any significant adverse effect on competition in India.”
The CCI application is a first step by Tata to integrate its airline businesses, which also include Vistara, a joint venture with Singapore Airlines, and AirAsia India, which it operates with Malaysia’s AirAsia X BHD.