Competition Commission of India has approved the acquisition of the entire shareholding in AirAsia India by Air India, a wholly-owned subsidiary of Tata Sons, the competition regulator said on Twitter.
AirAsia India is majority-owned by Tata Sons with a shareholding of 83.67%. AirAsia Investment Ltd, part of Malaysia’s AirAsia Group, holds the rest of the stake in AirAsia India.
Air India had sent a proposal to the Competition Commission of India to acquire AirAsia India in April. As part of the deal, Air India would take over AirAsia’s 16.3% stake in AirAsia India for around INR 139 crore.
Deals beyond a certain threshold require the approval of CCI, which works to foster competition as well as curb anti-competitive practices in the marketplace.
Tatas raised their stake in AirAsia India to 83.67% in December 2020 and are likely to complete the acquisition of the remaining 16% stake from Malaysian airline group AirAsia Berhad.
Tata Sons also runs the carrier Vistara in partnership with Singapore Airlines. An integration of Vistara’s business with Air India is likely to take time as negotiations are still underway with Singapore Airlines.
Tata Sons have also begun the task of consolidating its four airlines through a proposed merger — of AirAsia India Pvt Ltd (AAIPL) with Air India (AI) — and bringing them together under one roof at a seven-lakh-square-feet mega office in Gurgaon.
The move is expected to help Air India subsidiary Air India Express significantly expand its international operations.
AirAsia India, which started flying in June 2014, offers scheduled air passenger transport, air cargo transport and charter flight services in the country. It does not have international operations.
Tata Group is also looking to significantly expand the international operations of Air India Express in the next five years and will look to infuse USD 75-100 million into the airline as part of its expansion plans.
CCI approval will also help the salt-to-steel conglomerate consolidate its aviation entities including Singapore Airlines Ltd’s local joint venture Vistara, AirAsia India Pvt Ltd, Air India and Air India Express.
The combined entity of Air India and AirAsia India will have a 15.7% share of India’s domestic passenger market and is not expected to affect the competitive landscape in the aviation market in India.
On January 27 of this year, Tata Sons purchased Air India through its wholly-owned subsidiary Talace in a deal of INR 18,000 crore in equity and debt.
Deals beyond a certain threshold require competition watchdog CCI’s approval. AirAsia India, which started flying in June 2014, offers scheduled air passenger transport, air cargo transport and charter flight services in the country.
Meanwhile, the Competition and Consumer Commission of Singapore recently expressed concern over the Tatas acquiring Air India as three related entities – Singapore Airlines, Tata Sons and Vistara – have “overlapping passenger routes” between India and the city state, saying it needed to “assess further” whether there was sufficient competition from other unrelated airlines such as IndiGo.