Air India Express, AirAsia India merger is high risk for the Tatas
The planned merger of the two low-cost carriers comes with red flags for the Tata group’s grand plans for its aviation business under Air India.
Why read this story?
Editor's note: In the Tata group’s ambitious plan to make its vast but disjointed aviation business an industry leader, AirAsia India seems like the smallest, and easiest, piece of the puzzle. Mired in losses, the low-cost airline has never managed to live up to the hype, despite having two big promoters in Tata Sons and Malaysia-based AirAsia Berhad. Launched in 2013, AirAsia India saw its market share peak at 7%; it now hovers at around 6%. Its fleet has shrunk in a market where others are adding capacity. Besides, some of its recent practices to cut costs have shaved off the little equity it enjoyed with customers. The Tata group now has an opportunity to set things right. In June, the Competition Commission of India approved Air India’s acquisition of AirAsia India, paving the way for the Tata-owned airline to pick up the Malaysian budget carrier’s remaining 16.3% stake in the joint venture. The next step is to merge the loss-making entity with Air India’s low-cost arm, Air India Express, which mostly connects southern Indian cities to destinations in the Middle East. …
More in Business
You may also like
The 72 hours that saw IndiGo unravel
A crew crunch, new regulatory norms and simmering discontent push India’s biggest airline into its biggest crisis yet, one that could seriously dent its reputation for reliability.
IndiGo has a forex headache
India’s largest airline surprisingly doesn’t seem to have a hedging strategy that is good enough to guard against a weakening rupee. This could potentially clip its wings.
How SpiceJet and India’s legal system nearly killed the aircraft leasing business
Interminable delays and multiple out-of-court settlements later, the world’s leading lessors have tweaked their India playbook—stiffer terms, higher rentals. The fallout has hit aviation startups hard.