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AirAsia exits India with residual stake sale to Air India

Local entity and AI Express to merge into single carrier.

AirAsia exits India with residual stake sale to Air India
The Competition Commission of India had earlier cleared the acquisition of the residual 16.33% shareholding in AirAsia India by Air India. (IE)

Eight years after its first flight, Malaysian low-cost airline AirAsia on Wednesday said it has sold its residual stake of 16.33% in its India entity to Tata Group-owned Air India for Rs 155.64 crore, making a total exit from the country. Following the announcement, Air India said it has started the process to integrate AirAsia India with Air India Express to create a single low-cost carrier.

“Consolidation of these two airlines, both of which operate as low-cost carriers, will be undertaken as part of the restructuring roadmap that is being envisioned for the Tata Group’s airline business and is expected to bring customer, revenue, cost and operational benefits through broader adoption of each airlines’ best practices, systems and routes, and the combined entity’s greater scale,” AI said in a statement.

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It said that a working group has been formed to evaluate and execute the integration of the AI Group’s low-cost operations, which will be co-led by Sunil Bhaskaran, CEO and MD, AirAsia India, and Aloke Singh, CEO, Air India Express. The working group will report to a committee chaired by Air India MD and CEO, Campbell Wilson. The integration will take approximaely 12 months, AI said.

Campbell Wilson, CEO and MD, Air India said, “We are excited to initiate the creation of a single Air India Group low-cost carrier. This is a key step in the rationalisation and transformation of the group, and we will be working closely with the management teams and staff throughout the process. We also look forward to the many new opportunities a stronger AI Group low-cost carrier will bring for customers and staff alike.”

The Competition Commission of India had earlier cleared the acquisition of the residual 16.33% shareholding in AirAsia India by Air India.

The Kuala Lumpur-based AirAsia said the Covid-19 pandemic made it re-examine its priorities and reroute focus on the Asean markets instead.

Last month Singapore Airlines (SIA) said it was in talks with the Tata Group for a potential merger of Vistara and Air India. Full-service carrier Vistara is 51% controlled by the Tata Group while the balance is held by SIA.

AirAsia has flown more than 171,000 flights since January, carrying over 23 million passengers across the group. It is the fifth largest carrier in India, with a total market share of 5.7%. It was also the first foreign airline to establish a subsidiary in the country.

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Group CEO of AirAsia Aviation Group Bo Lingam said, “Since 2014 when we first commenced operation 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.”

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First published on: 03-11-2022 at 06:15 IST