Malaysian carrier’s India foray ends after eight years; Tatas are working to merge AirAsia India with low-cost service Air India Express
New Delhi, NFAPost: Ending its turbulent India foray after eight years, AirAsia Group has exited AirAsia India by selling its remaining 16.67 per cent stake to Tata Group-owned Air India for Rs 155.64 crore, Business Standard reported.
AirAsia India can use the “AirAsia” brand name for 12 months, the Malaysia-based group stated. AirAsia India has been making losses since its first commercial flight on June 12, 2014. Its net loss increased by 42 per cent to Rs 2,178 crore in FY22.
The Tata Group is currently in the process of merging AirAsia India with Air India Express, a low-cost subsidiary of Air India that operates flights mainly on Gulf routes.
Commenting on the development, AirAsia Group CEO Bo Lingam stated Covid has allowed us to re-examine the company’s priorities, and AirAsia felt that it was best suited for AirAsia to develop an Asean-only business, where the company has four great airlines– in Malaysia, Thailand, Indonesia and the Philippines– with a much loved brand and presence.
“India will remain an important market for AirAsia and will continue to be served by our various airlines,” said AirAsia Group CEO Bo Lingam.
AirAsia Group did not have a comfortable journey in India during the last eight years. It filed a criminal complaint in 2018 against Mittu Chandilya, who was CEO of AirAsia India from its birth to April 2016, alleging multiple financial irregularities.
In May 2018, the Central Bureau of Investigation (CBI) filed a case against the AirAsia Group CEO Tony Fernandes and other group executives for allegedly trying to manipulate government policies through corrupt means to get international license for AirAsia India.
As a result, AirAsia India, even though it currently has 28 planes in its fleet, has been unable to launch international flights till date. More importantly, in a market that has extremely tough competitors like IndiGo and SpiceJet, AirAsia India has not been able to make any profits (see table).
According to aviation analytics company Cirium, AirAsia India has been operating 1,267 flights per week connecting 19 Indian cities in October.
Lingam said AirAsia Group “will use the experience and knowledge we have gained from operating in the Indian domestic market to grow the Asean-Indian market in logistics and passenger services to a far greater extent.”
In a statement to Malaysian stock exchange, AirAsia Group said that the “brand license and technical services agreement” with AirAsia India “will be terminated after 12 months from the date of termination of the shareholders agreement between the parties or at an earlier date” as per the decision of the latter. The Group said it “is expected to receive Rs 155,64,87,800 (Equivalent to USD 18.83 million or MYR89.25 million) in gross proceeds.”
After winning the bid in October last year, the Tata Group took control of Air India on January 27. The Competition Commission of India (CCI) had on June 14 approved Air India’s request to acquire AirAsia India. The Tata Group is currently in discussions with Singapore Airlines on whether to merge Vistara, in which the former has 51 per cent stake, with Air India or not.
AirAsia Group CEO Bo Lingam said since 2014 when the company first commenced operations in India, AirAsia has built a great business in India, which is one of the world’s biggest civil aviation markets in the world.
“We have had a great experience working with India’s leading Tata Group. This is not the end of our relationship, but the beginning of a new one as we explore new and exciting opportunities to collaborate and enhance our synergies moving forward,” said AirAsia Group CEO Bo Lingam.
