Budget carrier Air India Express has some significant changes coming its way, with the new owners planning to shell out millions on fleet development. Last week, we learned about the carrier’s network expansion plans in the Southeast Asia region, and now reports of a multi-million-dollar investment suggest lofty plans for the LCC.

Investment over five years

While much has been said about the Tatas’ takeover of the full-service airline Air India, the conglomerate’s plans regarding its low-cost subsidiary Air India Express are gradually being revealed. To further expand the carrier’s footprint in new international markets, the Tata Group is planning to invest between $75 to $100 million in AI Express over the next five years.

The group will likely infuse $15-20 million every year, most of which will go towards adding more aircraft for the planned network expansion. A source familiar with the matter told Moneycontrol,

"The investment will mostly be to add more aircraft in the near future to Air India Express' current fleet of 24 Boeing 737-800s."

Simple Flying reported last week about AI Express exploring around 30 countries for international expansion, and the current report about cash infusion seems to be part of that plan. Speaking at an aviation event, Air India Express’ Chief of Commercial Tara Naidu had said the budget carrier wants to grow its network further under its new owner while maintaining its strategy of offering inter-regional routes within a six-hour stage length. She also mentioned that adding new aircraft is also on the cards.

What about the merger?

Even before Air India and Air India Express officially became part of the Tata Group, the conglomerate had begun planning for possible mergers between AI and Vistara and AI Express and AirAsia India.

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Simple Flying reported in November 2021 that the Tatas had started the process of uniting Air India Express with AirAsia India, with its team holding discussions with AI and AI Express’ management about staff integration, aircraft quality, and safety checks. Integration experts had also been roped in to ensure the merger is rooted in sound business decisions.

A source was quoted saying back then that there was “a sense of urgency to quickly get operations seamlessly off the ground and ensure no disruptions at customer-facing points.”

Then, this year Air India further added to the speculation by seeking approval from the Competition Commission of India to acquire AirAsia India.

Making it work

AirAsia India has been losing massive amounts of cash, posting an annual loss of ₹1532 crore ($206 million) in FY21. Combining it with AI Express, which is also a budget carrier, and running them as a single entity seems like a good idea.

However, there are some differences between the two. AI express operates a fleet of Boeing 737s on short and medium-haul international destinations, while AirAsia India relies on Airbus A320s for its domestic flights.

While typically, a budget carrier prefers a single fleet type to keep operational costs low, having two different airplane types shouldn’t exactly be a deal-breaker either. It’ll be interesting to see how the Tatas plan to draw out the best from both airlines in the future.

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Source: Moneycrontrol