Air India proposes to buy Air Asia’s remaining stake

NEW DELHI:  In what could be Tata Group’s first move to consolidate its airline operations, Air India, which was recently acquired by the conglomerate, has proposed to buy the no-frills carrier AirAsia India’s entire stake. “The proposed combination relates to the acquisition of the entire equity share capital of AirAsia (India) Private Limited (Air Asia India/ Target), by Air India Ltd (AIL), a wholly-owned subsidiary of Tata Sons,” said a notice filed with the CCI.

Tata Sons owns 83.67% stake in AirAsia India and the remaining stake is with AirAsia Investment Ltd (AAIL), which is part of Malaysia’s AirAsia Group. Tata is expected to buy the remaining 16.33% stake and take full ownership of the airline. Besides, Tata operates the full-service airline Vistara in a joint venture with Singapore Airlines. 

Tata owns 51% stake in Vistara while the remaining 49% is owned by Singapore Airline. There are wide speculations in the market Vistara would also be integrated in future. Deals beyond a certain threshold needs the approval of CCI, the regulator that curbs anti-competitive practices. 

As per the notice filed with the CCI, Air India said the proposed combination will not lead to any change in the competitive landscape or cause any adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined. However, the combination will lead to overlaps in operations in certain markets.

Full service carrier Air India (AIL) and its low-cost subsidiary Air India Express were acquired by Talace, a subsidiary of Tata Sons, in December last year for Rs 18,000 crore.

Tata’s acqisition bid in aviation space
Tata Sons owns 83.67% stake in AirAsia India and the remaining stake is with AirAsia Investment Ltd (AAIL), which is part of Malaysia’s AirAsia Group. Tata also owns 51% stake in Vistara.