Tata-Owned Air India Allowed To Fully Acquire Air Asia: India’s Biggest Airlines Will Be Created Now?
Air India’s proposal to acquire e entire shareholding in the carrier AirAsia India has been approved by the CCI.
AirAsia India provides scheduled air passenger transport, air cargo transport, and charter flight services throughout the country, since it began its operations in June 2014.
AirAsia To Be Entirely Acquired By Tata’s Air India
As of now, the company owns 83.67 percent of the equity share capital of Air Asia India, and the remaining is owned by AirAsia Investment Ltd (AAIL). AAIL is a part of Malaysia’s AirAsia Group.
As per the statement issued by the competition regulator CCI, “The proposed combination envisages the acquisition of the entire equity share capital of AirAsia (India) Private Limited (Air Asia India) by Air India Ltd. (AIL), an indirect wholly-owned subsidiary of TSPL (Tata Sons Pvt Ltd). At present, TSPL holds 83.67 per cent of the equity share capital of Air Asia India.”
Beyond a certain threshold, deals require the approval of CCI, the regulator that curbs anti-competitive practices.
According to the notice, the proposed integration will not result in any change in the competitive landscape or have any ill effect on competition in India.
However, it will lead to overlaps in operations in certain markets, with overlapping verticals at Bengaluru, Hyderabad, Delhi, Thiruvananthapuram and Mangaluru airports.
Tata’s Airline Businesses Under One Roof
The deal will finally consolidate Tata Group’s airline businesses and bring them under one roof.
It should also help the company improve the standing of its aviation stable, which comprises three unprofitable carriers including Vistara.
When the sale is made, the combined entities would take over 15.7% share in the domestic passenger market.
Currently, Indigo is the market leader with a share of almost 54%.
These aviation companies are expected to be housed in the same corporate office in Gurgaon.
A memo sent to the top management of these entities by the Tata Group notes that they all would move together into a complex in Gurgaon, in order to “optimise resources, increase team work and have higher synergies at work”.
It is also looking to relocate to a new 70,000 square feet office space on NH-8.