Air India offers to buy out AirAsia India

Air India has offered to acquire the entire equity share capital of AirAsia India, a notification by the Competition Commission of India (CCI) shows. Both airlines are owned by Tata Group, which has been trying to promote synergy between its airlines.

Tata Sons acquired Air India from the central government through its wholly owned subsidiary Talace Pvt Ltd. Meanwhile, AirAsia India is a joint venture between Tata Sons and AirAsia Group, where the former owns 83.67% stake while the latter has the remaining 16.33% stake.

“The proposed combination relates to the acquisition of the entire equity share capital of AirAsia (India) Private Limited, by Air India Ltd., an indirect wholly owned subsidiary of Tata Sons Private Limited (TSPL). At present, TSPL holds 83.67% of the equity share capital of AirAsia India,” the competition watchdog said in its notification under sections 5(a)(i)(A) and 5(b)(i)(A) of the Competition Act, 2002.

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, the CCI points out in its notification.

However, the acquisition proposal includes some horizontal and vertical overlaps. Both Air India and Air Asia are in the business of domestic air passenger transport, as well as air cargo transport and charter flights across India. These constitute the horizontal overlaps of the combination.

Air India, along with its subsidiary Air India Express, also provides international scheduled air passenger transport services.

The combination will see vertical overlap in the upstream market for ground handling services and the downstream market for passenger air transport services (including charter flight services) at Bengaluru, Hyderabad, Delhi, Thiruvananthapuram and Mangalore airports.

Vertical overlaps will also occur in the upstream market for cargo handling services and the downstream markets for air cargo transportation services and charter flight services at Bengaluru airport, as well as the upstream market for in-flight catering services and the downstream market for passenger air transport services (including charter flight services) in India.

Tata Sons onboarded Air India in January, acquiring the entire stake in the airline along with its subsidiary Air India Express and 50% in its ground handling arm Air India SATS. The conglomerate has been running AirAsia India since 2014 with AirAsia Group. Apart from these three airlines, Tata Group also runs Vistara — a joint venture with Singapore Airlines.

Since acquiring Air India, Tata has been trying to enhance cooperation between its airlines. To begin with, Air India and AirAsia have signed an agreement to accept each other’s domestic passengers during flight disruptions. This deal will remain in force till February 9, 2024.