THE TATA GROUP is preparing to begin the process of combining its airline firms under the Air India name, beginning with the transfer of ownership in AirAsia India to Air India soon and ending with the unification of its entire airline company under a single banner no later than 2024.
The consolidation process, which is being considered at many levels within the business, is set to begin with the merging of AirAsia India with Air India Express, which is expected to be completed within the next 12 months.
Following this, the group is anticipated to consider integrating its full-service airline Vistara into Air India, with the possibility of Singapore Airlines (SIA), an equity partner in Vistara, eventually collaborating with the Tata Group to become a part-owner of Air India as well.
“The transfer will take place soon, making AirAsia India a subsidiary of Air India; soon after, AirAsia would be amalgamated with Air India Express.” The merger of the two airlines is projected to take at least 12 months from the commencement date, according to a person close to the situation. Tata Sons, the parent company for Tata Group enterprises, now owns the majority of AirAsia India.
However, the group would like to keep AirAsia India’s flying licence valid because the airline’s approvals have been challenged in court by former BJP MP Subramanian Swamy.
In October of last year, the Tata Group won a bid to purchase 100% of Air India by paying the Union government Rs 18,000 crore. The government handed over the airline to the Tata Group in January of this year. Along with Air India, the group acquired Air India Express, a wholly owned low-cost subsidiary of Air India that plays in the international short-haul market, and a 50% share in ground handling business AISATS.
The Tata Group owns 83.67 percent of AirAsia India and a majority 51 percent of Vistara, with Malaysia-based AirAsia Berhad owning 16.33 percent of the former and SIA controlling 49 percent of the latter.
As part of its airline portfolio consolidation, the group has opted to fully purchase AirAsia India by purchasing AirAsia Berhad’s holding for $30 million.
According to official sources, the merger of Air India Express and AirAsia India would begin with the integration of information technology and the passenger booking system. The AI Express system is set to be replaced by AirAsia India’s system, which is superior in every way.
The airline will fly two types of aircraft as part of the plan: Air India Express’ Boeing 737 and AirAsia’s Airbus 320. According to sources, one of the proposals being explored is to transfer all AirAsia India planes to Air India Express.
Under its new CEO, Campbell Wilson, Air India has laid out a five-year plan to re-establish itself as a world-class carrier while targeting a 30% domestic market share. The airline, which revealed intentions to induct 30 new wide-body and narrow-body aircraft last week, has code-named the plan Vihaan. AI, which means “the dawn of a new age” in Sanskrit.
