InvestorQ : How will Air India look after it acquires Air Asia?
Debbie Mascarenhas made post

How will Air India look after it acquires Air Asia?

Arti Chavan answered.
4 weeks ago

Air Asia plans to fully exit its India venture after 8 years. It will now focus on its core ASEAN franchise comprising of Malaysia, Thailand, Indonesia and the Philippines. Air India is in the midst of its operational review process to integrate AirAsia India with Air India Express. It may be recollected that Air India Express is the low cost business of Air India and there is a natural synergy between the two. Air India has signed agreements to enhance its stake in Air Asia India to 100%, by buying out the balance 16.33% stake from Air Asia Malaysia.

The merger deal between Air India Express and Air Asia India will be consummated by the year 2023 end. Once that is done, Tatas will have just one low-cost carrier for the Air India group under the banner of Air India Express, so the message to customers is crystal clear. That is how the Tata group game plan falls in place. Air Asia India and Air India Express combine will be the low cost carrier business of the Tata group. On the other hand, the full service airline business of the Tata group will comprise of Air India and Vistara. That gives a much better focus since both these airline business have a different set of economics.

Some of the regulatory formalities are done including the approval of the Competition Commission of India (CCI). India clearly remains one of the biggest and also the most promising aviation markets in the world, albeit fairly tough to crack. At the end of the day, the Indian consumer not only is cost conscious and seeks value for money, but the Indian geography is also not too friendly to an airline business. For Air Asia, selling out makes a lot of business sense as it allows them to focus on their core ASEAN franchise. For Air India, it complements their existing business model and revives aviation leadership dreams.