Tata group-owned Air India’s proposal for the complete acquisition of no-frills carrier AirAsia India was accepted by the CCI.
- On Tuesday, Air India got CCI approval to acquire the entire shareholding in AirAsia India.
- Tata Sons already holds an 83.67 percent stake in AirAsia India, sharing the rest with Air India Investment Limited.
- After offering a winning bid last year, the Tatas resumed management control of Air India and Air India Express in January.
Through a tweet on Tuesday, the competition regulator, the Competition Commission of India (CCI), announced that it has approved the proposal for Air Asia’s acquisition.
They have thus consented to the acquisition of the entire shareholding in AirAsia India by Air India.
Deals valued beyond a certain threshold require the approval of the anti-trust regulator, the Competition Commission of India
. The CCI acts as a competition watchdog and works to foster competition while also curbing any anti-competitive practices in the marketplace.
The proposed combination entails the acquisition of the entire equity share capital of AirAsia (India) Private Limited by Air India Limited (AIL).
AIL is an indirect wholly-owned subsidiary of Tata Sons Pvt. Ltd. (TSPL). Combined, the two entities will have a 15.7 percent share of India’s entire domestic passenger market.
The Plan Ahead
Tata Sons plan to integrate four airlines under its belt. These include Air India, Air India Express, Vistara, AirAsia India, and ground handling firm Air India Sats Airport Private Limited (AISATS).
It started the integration process in January with the assumption of management control of Air India. As part of this process, all four airlines will move into a single office.
Both Air India and AirAsia are run by the Tata group. Last year, full-service carrier Air India and its low-cost subsidiary Air India Express were acquired by Palace Private Limited.
Talace Private Limited is a wholly-owned subsidiary of Tata Sons Private Ltd. In October 2021, Tatas emerged as the winning bidder for Air India. AIL was making losses at the time.
The bid offered Rs 18,000 crore, comprising a cash payment of Rs 2,700 crore. It also took over the carrier’s debt worth Rs 15,300 crore.
Thus, the Tata group regained ownership of Air India and Air India Express in January this year.
Air India Limited is primarily engaged in the business of providing scheduled air passenger transport services. This service is provided in both domestic and international capacities.
It also provides air cargo transport services and charter flight services in India. Air India Express Limited (AIXL) is a wholly-owned subsidiary of Air India. It doesn’t operate in the domestic market and flies only between India and the Gulf routes.
AirAsia India is a joint venture between Tata Sons Pvt. Ltd. and AirAsia Investment Limited (AAIL). At present, Tata Sons holds 83.67 percent of the equity share capital of AirAsia India, and the rest, 16.33 percent, is held by AirAsia Investment Ltd (AAIL).
AAIL is a part of Malaysia’s airline group, AirAsia Berhad. In December 2020, Tatas raised its stake in AirAsia India to 83.67 percent. As of late April this year, they reported intending to complete the entire acquisition.
Air Asia India operates under the brand name “AirAsia”. It started flying in June 2014. AirAsia India does not run international operations of scheduled air passenger transport services.
It is engaged in the business of providing domestic scheduled air passenger transport services, air cargo transport services, and charter flight services within the country.
In December of 2021, AirAsia India announced that it had paid all its dues to the Airports Authority of India (AAI).
From September 2021, the airline was making all payments as per credit terms on due dates. Air Asia, along with Vistara, has never made money.
Combined, they have lost around $845 million through March this year, according to estimates from CAPA- Centre for aviation.
As per AAI’s internal documents, AirAsia India’s dues to the AAI increased from Rs. 1.47 crore in January 2020 to Rs. 3.58 crore in October 2021.
Apart from these, the Tata group also operates full-service carrier Vistara in a joint venture with Singapore Airlines.
The Tata Group plans to integrate four airlines under the same roof. The process started with resuming management control over Air India.
They also ran AirAsia India as a joint venture, which they proposed to acquire completely.
On Tuesday, the fair-trade regulator, CCI, announced on Twitter that they had approved Air India’s plan to buy all of AirAsia India’s shares.