Tata-owned Air India proposes to acquire entire equity of AirAsia India
April 27, 2022: In a move that could see the two airlines competing head-to-head, Air India has reportedly proposed to acquire the entire equity of AirAsia India.
AirAsia India is a joint venture between AirAsia, Tata Sons and Telestra Tradeplace. It started operations in 2014 and is currently the fourth largest carrier in the country with a market share of 2.6%.
If the deal goes through, it would give Air India a significant boost in its domestic operations as AirAsia India has a strong presence in the low-cost segment.
The two airlines have been in talks for some time now and an agreement is expected to be reached soon.
While the acquisition would be a big boost for Air India, it could pose a threat to other low-cost airlines that currently dominate the market such as IndiGo and SpiceJet.
This development comes at a time when Air India is looking to improve its financial performance and focus on domestic operations after years of losses.
Tata Sons holds 83.67 per cent of Air Asia India’s equity share capital, while joint venture Malaysia’s AirAsia holds 16.33 per cent.
As per the notification, Air India has submitted relevant markets in terms of horizontal overlap. This is the market for the provision of domestic passenger air transport services in India, the market for the provision of domestic air cargo transport services in India and the market for the provision of charter flight services in India.
It has also submitted to the respective markets associated with vertical overlap. These are:
– Upstream market for cargo handling services and downstream market for air cargo transport services and charter fighting services at Bengaluru Airport.
– Upstream market for ground handling services at Bengaluru, Mangalore, Delhi, Hyderabad, and Thiruvananthapuram airports and downstream market for passenger air transport services (including charter flight services); And upstream market for cargo handling services at Bengaluru Airport.
– Upstream market for in-flight catering services and downstream market for passenger air transport services (including charter flight services) in India.
Tata group to merge Air Asia with Air India
Air India, which is currently struggling with financial losses and a high debt burden, may soon see some positive change. According to reports, the Tata group is considering acquiring the low-cost carrier Air Asia India along with its joint venture partner Telestra Tradeplace.
The deal would reportedly involve merging this airline with Air India. However, neither the Tata group nor Air Asia has confirmed this news yet.
The move could give a boost to Air India’s domestic operations by allowing it access to the low-cost carrier’s strong presence in the market.
It would also help strengthen its position against rivals such as Indigo and SpiceJet, which currently dominate the low-cost segment in India.
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However, this development could also pose a threat to other airlines operating in the country if Air India manages to improve its financial performance with this acquisition. Stay tuned for more updates on this story.