Mumbai: The Tatas appear to be moving closer to a decision to bid for Air India in partnership with Singapore Airlines and have already started working on the structure for such an acquisition — including a merger of AirAsia India, in which they hold 51%, and Air India Express, a 100% subsidiary of the government-owned national carrier.
Not just that, the Tata Group is reliably learned to have approached Tony Fernandes, the Malaysian entrepreneur who holds 49% in AirAsia India, for his approval to acquire AI Express. The shareholders’ agreement stipulates that the Tatas cannot invest more than 10% in another budget airline without Fernandes being willing to waive the covenant.
People close to the development said a new agreement is expected to be signed soon. In lieu of the waiver, the Tatas have proposed to combine AirAsia India and AI Express. “The merger will give Fernandes a bigger play in Indian aviation; so, it’s a win-win for both partners,” said a person with knowledge of the discussions.
AirAsia India took to the skies in 2013 as a joint venture between Tata Sons and Fernandes’ airline company, heralding the return of India’s largest conglomerate to aviation, a business it had pioneered through Air India before the carrier was nationalised. Tatas also operate Vistara, a full-service carrier, as a 51-49% JV with Singapore Airlines. Tata Sons chairman N Chandrasekaran has in the recent past told TOI that the company “will not run a third airline unless we merge”. A combination of Air India and Vistara would give the Tatas a monopoly in the full-service space.
AI Express flies to 20 Indian cities and 13 international destinations in the Gulf and Southeast Asia with a fleet of 25 Boeing 737s while AirAsia’s fleet of 29 Airbus A320s services 21 cities across the country.
03/02/20 Reeba Zachariah/Times of India
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Not just that, the Tata Group is reliably learned to have approached Tony Fernandes, the Malaysian entrepreneur who holds 49% in AirAsia India, for his approval to acquire AI Express. The shareholders’ agreement stipulates that the Tatas cannot invest more than 10% in another budget airline without Fernandes being willing to waive the covenant.
People close to the development said a new agreement is expected to be signed soon. In lieu of the waiver, the Tatas have proposed to combine AirAsia India and AI Express. “The merger will give Fernandes a bigger play in Indian aviation; so, it’s a win-win for both partners,” said a person with knowledge of the discussions.
AirAsia India took to the skies in 2013 as a joint venture between Tata Sons and Fernandes’ airline company, heralding the return of India’s largest conglomerate to aviation, a business it had pioneered through Air India before the carrier was nationalised. Tatas also operate Vistara, a full-service carrier, as a 51-49% JV with Singapore Airlines. Tata Sons chairman N Chandrasekaran has in the recent past told TOI that the company “will not run a third airline unless we merge”. A combination of Air India and Vistara would give the Tatas a monopoly in the full-service space.
AI Express flies to 20 Indian cities and 13 international destinations in the Gulf and Southeast Asia with a fleet of 25 Boeing 737s while AirAsia’s fleet of 29 Airbus A320s services 21 cities across the country.
03/02/20 Reeba Zachariah/Times of India
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