This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.
The Covid pandemic could soon claim its first casualty in Indian aviation as AirAsia India’s 49 percent partner, Malaysia’s AirAsia, considers pulling its share in its joint venture with the Tata Group.
“We have had fantastic partners in the Tatas. But whether we should put money to continue in India or to expand in Southeast Asia, that's a discussion I'm having with my partners in India and, imminently, I'm sure there'll be some announcements one way or the other,” said AirAsia Group CEO Tony Fernandes at a virtual conference organized by CAPA Center for Aviation last week. The parent company had stopped funding its Indian operations.
“If the Tatas acquire AirAsia India, it will be the first step in consolidation,” Kapil Kaul, CAPA’s head of the Indian subcontinent and the Middle East, told AIN.
Like in Japan, which AirAsia exited in October ultimately due to Covid, according to Fernandes, AirAsia India controls a minuscule 7 percent of the Indian market. Rival budget carrier IndiGo leads, with a more than 55 percent market share and a fleet of 282 airplanes. All of AirAsia Group’s fleet—including at subsidiaries in Malaysia, Thailand, Indonesia, the Philippines, and India, along with the three medium-haul carriers AirAsia X in Malaysia, Thailand, and Indonesia—totals 243 airplanes and plans call for that to shrink to 221 by December 2021.
“The reality is, we've got 100-odd planes on the ground,” said Fernandes. “Why would you take new planes right now? We may have to return the planes in the short term as we rebuild our cash balances and balance sheet.”
IndiGo, meanwhile, continues to take deliveries from Airbus as planned, “not least for the fuel savings that the A320/321neo aircraft deliver over the older ceos,” IndiGo chief commercial officer William Boulter told AIN. IndiGo enjoys the added advantage of access to a large growing domestic market that, unlike in most of Asia, is recovering “robustly,” added Boulter.
AirAsia X Malaysia has grounded some 25 widebodies since April, further adding to losses. With access to its largest market—China—shut, AirAsia X Malaysia CEO Benyamin Ismail said it will hibernate “until we see some positive turnaround in the market.”