The Competition Commission of India approved Air India’s proposal to buy the entire equity share capital of AirAsia India in order to form a single airline in June 2022.
Capital A’s airline group’s holding company, AirAsia Aviation Group Limited (AAAGL), announced on Wednesday that it had sold its remaining stake in the airline’s India operations to Air India, an affiliate of Tata Sons Private Limited, for approximately $19 million. Until recently, Tata Sons held an 83.67% stake in AirAsia India, with the remaining stake held by AirAsia Investment Ltd. (AAIL), a subsidiary of Malaysia’s AirAsia Group.
The company was founded in 2014 as a low-cost carrier, with Tata Sons owning 51% and AirAsia Berhad owning the remaining 49%. The joint venture encountered difficulties due to legal complications regarding ownership and effective control. Tatas acquired 83.67% of AirAsia Berhad two years ago by purchasing 32.67% of the company for Rs 286 crore.
“All customary consents and regulatory approvals have been secured,” the company said in a statement. AAAGL is expected to receive Rs 1,556,487,800 in gross proceeds (equivalent to $18.83 million). “As Capital A has marked the remaining 16.33% of AAI to its fair value, there will be no gain or loss on the disposal.”
Earlier in June, the Competition Commission of India approved Air India’s proposal to acquire all of AirAsia India’s equity share capital in order to form a single airline. AirAsia Aviation Group said in a statement that as it resumes operations following the pandemic, it is re-examining its strategic objectives to focus on the Asean region given its strong network and significant presence in the region.
“AirAsia has built a great business in India, which is one of the world’s largest civil aviation markets, since we first began operations there in 2014. We had a fantastic time working with India’s leading Tata Group “AirAsia Aviation Group,” Group Chief Executive Officer, Bo Lingam.
“COVID-19 has allowed us to re-examine our priorities, and we felt that it was best suited for AirAsia to develop an Asean-only business, where we have four great airlines with a much-loved brand and presence in Malaysia, Thailand, Indonesia, and the Philippines,” he added.
Air Asia India was India’s fifth-largest airline, with a total market share of 5.7%. With the acquisition, the entity will control 15.7% of the domestic passenger market in the country.