Malaysian carrier AirAsia will be reduced to a financial investor in its India unit as larger strategic partner Tata Sons initiates consolidation moves in the aviation business. AirAsia, which till recently held 49% in its India venture, will see its stake fall to 13% as it prioritises its geographical play after being faced with Covid-induced financial woes. It will retain a low double-digit stake in the India unit as the latter will continue to use the AirAsia brand and other agreements like aircraft maintenance and ticketing-accounting software for some time. Tata Sons, which already owns a significant majority stake (about 75%) in AirAsia India, will see its stake further go up to 87%.
While the Malaysian carrier has a common website for its operations in different geographies, Tata Sons has started the process to have a separate website for AirAsia India, it is learnt. Its IT subsidiary TCS is also involved in developing a crew-scheduling software. Tata Sons declined to comment on the report, while AirAsia did not respond to queries.
“It is not going to be an instant divorce, but a prolonged one,” said sources. AirAsia had said earlier that it was reviewing its investment in India after it ceased flying in Japan. The Malaysian company was the first foreign airline to set up an arm in India in 2013 and the local joint venture marked Tata Sons’s return to the aviation industry after it ceded control of Air India in 1953. Tata Sons also has another airline venture, Vistara, which has collaboration with Singapore Airlines. It has recently expressed an interest in buying state-run Air India (AI).
While Tata Sons’s broader airline integration plan is not clear, it intends to channel the proposed AI acquisition through AirAsia India and not through Vistara. This is because Singapore Airlines is currently not on board for the AI bid due to its own pandemic-induced financial difficulties. So, the AirAsia brand could be retained for about two-three years, depending on how long it takes for Tata Sons to integrate its airlines business into a mega umbrella carrier, said sources.
