NEW DEHLI, India: According to an application submitted to the the Competition Commission of India (CCI), Tata Group-owned Air India has proposed to purchase the entire equity share capital of low cost carrier AirAsia India, to merge into a single airline.
Tata Sons has an 83.67 percent stake in AirAsia India.
In a $2.4 billion equity-and-debt deal, the autos-to-steel conglomerate also bought state-run carrier Air India, regaining ownership of what used to be India’s flagship carrier, after nearly 70 years.
Vinamra Longani, head of operations at Sarin and Co, a law firm specializing in aircraft leasing and finance, said, “This was on expected lines, as it makes no sense for the Tata Group to own stakes in separate airlines,” as reported by Reuters.
“The Tata Group has embarked on what will go down in history as possibly one of the most challenging airline realignment or turnarounds,” he added.
While Air India has lucrative landing slots, Tata faces an uphill task to upgrade the airline’s aging fleet and improve its financials and service levels.
The application stated, “The proposed combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India.”
The application is the first move by Tata to integrate its airline businesses, which also include Vistara, a joint venture with Singapore Airlines, and AirAsia India, which operates with Malaysia’s AirAsia X Bhd.
