NEW DELHI: Malaysian airline AirAsia Group Berhad has decided to sell 32.67% of its shares in Air- Asia India to its Indian partner and majority shareholder Tata Sons for $37.7 million. This deal will take Tata’s shareholding in AirAsia India to 83.6% from 51% while AirAsia Group’s holding comes down to 16.33% from 49%. Tatas also have the option to acquire the remaining 16.33% stake for $18.83 million.
This development comes two weeks after the Tata Group had submitted an Expression of Interest for Air India. The deadline to submit a physical bid gets over on December 29 and industry sources believe Tatas may use AirAsia India as the vehicle to buy Air India. As for Air Asia, the sale would allow it to focus on its recovery in its key Southeast Asian markets after being hit by the Covid-19 pandemic.
Air- Asia had previously shut down operations in Japan due to pandemic- related issues. Bo Lingam, president (airlines) at AirAsia Group, said, “This transaction will allow us to use cash to grow market share in our core markets in Asean as well as for our future expansion into Cambodia, Myanmar and Vietnam.” He added,
“This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in Asean while continuing our market dominance for travel from Asean to India and North Asia.” Air Asia entered the Indian Market in 2014 but it never managed to compete against the likes of IndiGo and SpicetJet. It flies to 19 domestic destinations across India with 30 Airbus A320 aircraft.
Group’s cumulative market share at 13%
If Tatas acquire Air India, it could take its cumulative market share in the domestic aviation market to over 23%. Air Asia India has a market share of 6.6%. Vistara, another JV airline of Tatas, has a market share of 6.3% while Air India’s market share is pegged at 10.3%