In what will be its first M& A under new owner Tata Sons, Air India has proposed to buy low cost carrier AirAsia India, according to an application with the Competition Commission of India (CCI). The move will see Malaysia’s AirAsia exiting the airline venture nine years after it entered India with high hopes.
Air India will buy AirAsia’s 16.33% stake in the airline venture for £13.9 million. The remaining stake of 83.67% in AirAsia India is already held by Tata Sons. According to the shareholders’ agreement between AirAsia and Tata Sons, the latter can acquire the former’s stake 16.33% in the India unit directly or through an affiliate. Since Air India is now an affiliate of Tatas, the purchase of AirAsia’s stake has been routed through it, sources said.
The CCI application is the first step by Tata Sons to integrate its aviation business, which also includes low-cost carrier Air India Express. The proposed acquisition of AirAsia India by Air India “will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India”, read the CCI application.
The Tata Sons airline brands including Air India, AirAsia India and Vistara (which is a joint venture with Singapore Airlines) - have a domestic market share of 25%, while IndiGo remains the market leader in India with a share of almost 54%.
