Air India has proposed to buy a 100% stake in Air Asia India. For the same, the Tata-Group, which owns Air India now, has sought approval from the Competition Commission of India (CCI).
Presently, Tata Sons Private Limited owns a 83.67% stake in Air Asia India with the remaining stake held by AirAsia Investment Ltd (AAIL), which is part of Malaysia’s AirAsia Group. In January 2022, full service carrier Air India and its low-cost subsidiary Air India Express were acquired by Talace Private Limited, a wholly-owned subsidiary of Tata Sons Private Limited.
The proposal reads:
The proposed combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined.
Deals beyond a certain threshold require the approval of CCI, which works to foster competition as well as curb anti-competitive practices in the market place.
For legal provisions, the filing notes that the overlap of the two airlines combining is,
- the market for domestic passenger air transport services in India
- the market for the provision of domestic air cargo transportation services in India
- the market for the provision of charter flight services in India.
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Air India also notes that there are some vertical overlaps, implying the various airports where the two airlines’ operations overlap. These are indicated as:
This proposal is interesting to say the least. Earlier when Tata Sons acquired Air India in January, all thought that Air Asia India would be combined with Air India Express, given that both are low cost carriers and both the airlines’ networks do not overlap, as Air Asia India exclusively operates domestic flights while Air India Express primarily operates international flights. Air Asia India is an all Airbus operator operating Airbus A320ceo and A320neo aircraft while Air India Express only operates Boeing B737-800 aircraft. So merging their fleets would also be a big task.
However, if CCI passes the proposal and Tata combines Air India and Air Asia India, the fleet merger would not be a big task as both of them operate Airbus A320 family aircraft. Also, the merger will give a good market share in the domestic market, easily overtaking SpiceJet and GoFIRST.
Of course, the aircraft will have to be repainted and may even have to be reconfigured but this can immediately reduce operating costs.
It will be very interesting how the proposed merger goes ahead.
Featured image by Air India
What do you think of Tata’s plan to merge Air India with Air Asia India? Let me know in the comments section below.