Tata’s aviation web grows as AirAsia’s shrinks

The AirAsia web of global airlines continues to contract. The Japanese outpost halted operations earlier this year and the long-haul AirAsia X group could be forced to slash its A330neo order book in the face of massive debt and restructuring challenges. In India the operation, a partnership with Tata Group, also faces pressures and the parent operation is not keen to invest further. By all accounts AirAsia India is on the road to divorce itself from the ASEAN brand.

Reports in the Times of India suggest that the 49% stake in the partnership held by AirAsia Group will be reduced to just 13% while Tata Group invests the necessary capital to increase its stake. And while the operations will continue to use the AirAsia branding and other shared resources for now, that is not part of the long term plan for the airline.

TOI reports that Tata Group is spinning up a dedicated website for retail sales and another set of systems to manage crew scheduling for the AirAsia India brand, with a goal of separating them from the AirAsia back-office systems in the coming years.

Tata is also a leading contender for the privatization of Air India, nearly 70 years after the company sold the airline to the government. And it is potentially using the AirAsia India operations to facilitate that bid. Or maybe not.

There’s also the stake Tata holds in Vistara, shared with Singapore Airlines. That pair will not be the driving force towards an Air India deal as Singapore Airlines is not in a position to stump the additional cash required. It is dealing with its own financial catastrophe at home.

And there is no guarantee the privatization plan comes to fruition.

Should it come to pass, however, Tata could potentially be a majority owner across three airlines covering the LCC, local(ish) full-service and long-haul markets. Running all three separate makes very little sense. But getting to a position where they can be combined would also prove challenging.