Foundation bricks for a future Tata-owned single airline company are possibly being laid with news of a likely merger of AI Express and AirAsia India. The Tatas have begun working on the merger of the two low-cost carriers, which is being seen as the first significant step towards a future single airline entity under the Tata brand. Let's find out more.
AI Express-AirAsia India merger
The Tata Group has started the process of uniting Air India Express with no-frills carrier AirAsia India, as reported by the Economic Times on November 18th. While the acquisition of Air India and AI express by the Tatas will fully take place sometime in the coming months, the Indian conglomerate is wasting no time to streamline future operations.
According to the report, Tata has met with the senior management of Air India and AirAsia India to discuss staff integration, aircraft quality, and safety checks. Integration experts have also been roped in to ensure the merger is rooted in sound business decisions.
Sources close to the matter told ET,
“There is a sense of urgency to quickly get operations seamlessly off the ground and ensure no disruptions at customer-facing points.”
Tata's stake in AirAsia India
AirAsia India started as a joint venture between the Tata Group and AirAsia Group, with the Tatas owning 51% initially. In December 2020, the Indian conglomerate bought an additional 32.67% stake in the airline, increasing its share to 83.67%. Now there are reports that the business giant is set to acquire the remaining 16.33% stake in the company for $19 million.
Being a majority shareholder in AirAsia India has made it easy for the Tata Group to plan the merger with AI express. A person monitoring the development told ET,
“This is the most logical move at this stage and with Tata owning a majority in Air Asia, the integration is easier. With many experts on deck, this integration will help the group swiftly set up the single airline structure it has been planning for a while.”
AirAsia India has been losing cash massively, 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 airlines. 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. It'll be interesting to see how the Tatas plan to draw out the best from both carriers through the merger.
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Looking ahead
It sure looks like the Tata Group is keen on creating a single aviation entity sometime in the future. All eyes are now on Air India and Vistara. Singapore Airlines commands a significant share in Vistara at 49%, and the Tatas are discussing the matter with SIA of integrating the schedules of both carriers.
It's good to see Tata's vision of shaking up things and reorganizing the Air India management. The airline has been entangled in the reams of red tape for far too long. A new business culture of swift action and accountability driven by profit and good customer service is just what the carrier needs.
Are you excited about the possibility of the merger of AI Express and AirAsia India? Do share your comments below.