The AirAsia Aviation Group, based in Malaysia, has agreed to quit one of the largest civil aviation markets in the world by selling all of its shares in AirAsia India, in which Air India (AI) already holds a controlling interest. Eight years ago, the group entered the market with high hopes.
It is selling 16. 3% in AirAsia India, which currently flies to 18 destinations with a market share of about 6%, for $19 million to AI, an affiliate of Tata Sons. Last year, it had sold 32. 7% in the low cost Indian carrier for $38 million to Tata Sons, reducing itself to an insignificant junior partner.
Tata Sons had subsequently transferred the 32.7% as well as its own 51% share in AirAsia India to AI to consolidate its aviation interests under AI. Once the deal is completed, AirAsia India will become a 100% arm of AI.
Due to its involvement in scandals, AirAsia India never received approval to operate internationally, hence it was unable to compete with other low-cost airlines like GoFirst or SpiceJet. The joint venture has received some tax notices throughout the course of the Malaysian carrier's operations in India, and it will "continue to collaborate with AirAsia India in contesting those," according to the statement.
For a brief time, the Indian company may continue to use the AirAsia name. However, after integrating AirAsia India with its 100% affiliate Air India Express, AI intends to rebrand the whole budget sector as Air India Express.