AirAsia India is in the news for all the wrong reasons again all of this past week. There are multiple reasons for this, but this fledgeling airline which is a joint venture between the Tata Group and AirAsia has really not caught a lucky break since it was the establishment in 2014.
AirAsia India got its name involved in corruption case about how they received their license, then had a big spar about how the airline was being remote-control operated from Malaysia by AirAsia. At the same time, it should have really been operated from India in the first place by local management. While the sibling airline Vistara was cleared to fly abroad a year ago, AirAsia India’s permissions to fly abroad are nowhere in sight, and perhaps the airline might not even be interested at the moment. AirAsia India holds a 7% domestic market share (approx) in the Indian market as of August 2020.
Earlier this year, the airline got involved in a fiasco where a (now ex) employee of the airline, who is very active on Social Media, levelled allegations on the airline for their safety practices. DGCA recently suspended the airline’s chief pilot and head of safety after their own investigation.
The latest soup AirAsia India finds itself. in started to emerge last week when the Minister for Civil Aviation (State), Independent Charge made an off the hook comment during the inauguration ceremony of some facilities at Chandigarh Airport. He answered a journalist’s question on the record, stating to the effect that AirAsia is in duress and will be shutting shop soon.
“Air Asia ki dukaan band ho rahi hai,” said Civil Aviation Minister Hardeep Puri in Chandigarh today.
“Dukaan band ho rahi matlab unki parent company mein problems hain. Don’t go by a particular airline. They may be in financial stress. I should not use those words,” he added. pic.twitter.com/gkYdz4efQY
— Man Aman Singh Chhina (@manaman_chhina) October 3, 2020
When a journalist asked India's civil aviation minister Hardeep Singh Puri why AirAsia India has suspended flights from Chandigarh, he said:
"AirAsia ki dukan bandh honewali hain. Unki parent company main problem hain."
— Arindam Majumder (@ari_maj) October 4, 2020
While this comment was clarified by the ministry later as being taken out of context, on October 5, 2020, AirAsia Japan announced the closure of operations, due to CoVid-19 and the associated toll it took on travel.
AirAsia India, on the other hand has stopped receiving funding from AirAsia Bhd, essentially, injection of 49% share capital while the company burns capital these days to pay for the salaries of the 3000 people on their rolls and the other costs of running an airline. The first whiff of this brewing trouble came via Bloomberg.
Breaking now: AirAsia Group has completely stopped funding AirAsia India, sources say. The airline is flying on stop-gap funding from majotrity shareholder Tata Group, and there's no immediate threat of the airline shutting down while Tatas evaluate options.
— Anurag Kotoky (@anuragkotoky) October 5, 2020
Times of India reports that AirAsia India is reluctant to infuse fresh funds into the airline due to its own financial troubles and Tata Sons is exploring options to buy out the company from AirAsia India.
Does this mean AirAsia India will shut down? Not really. The airline seems to be in a holding pattern for the moment while Tatas explore their next move, and will be funded by them in the interim as well. The airline promised to make a profit in 4 months of launch, but the hard hitting reality of Indian aviation means that they haven’t made a single year of profit over the years.
So, whats happening at AirAsia? A lot, clearly, but nothing seems to be going right for them at the moment. We need to see what are the next steps the airline’s owners take to the effect of saving the airline.
What do you think is happening at AirAsia India as a customer of the airline?