From AirAsia India to Air Ginger? The many options and questions that face Tata Sons

Will there be a merger of AirAsia India with Air India Express, the low-cost international arm of Air India, and Vistara,a full-service airline, with Air India?

Won’t AirAsia India be the preferred vehicle to carry out the acquisition of Air India? With AirAsia Berhad now reduced to an investor status with a stake of about 13 percent in the Indian entity, the Tatas now don't need approval from the Malaysian company, which competes with Air India Express.

"There are several options on the table at the moment. For instance, Tata Sons may not even need an airline as its vehicle to buy Air India," an executive with a private airline told Moneycontrol on condition of anonymity.

As these questions swirl around, Bombay House has chosen silence. It is yet to officially confirm if it has submitted an Expression of Interest for Air India; December 29 was the deadline to submit physical bids.

It has also kept quiet on the AirAsia India development. It was AirAsia Berhad that made the official announcement on December 29, on Malaysian exchanges about its near-exit from the Indian joint venture that was launched in 2014.

The announcement also gave enough indication that AirAsia India may take on a new name. "The directors of AirAsia  also wishes to announce that AAIL has further agreed to waive off unpaid brand licence fees payable by AAI to AirAsia Berhad, a wholly owned subsidiary of the company, under the Brand License and Technical Services Agreement dated 30 December 2019 due to the COVID-19 pandemic," the Malaysian carrier said.

But even that raises a question. "While Tata Sons may not want to keep the brand, re-branding can be a costly exercise in these difficult times. Would the company want to do that?" said the private airline executive.

A free hand, but...

With group CEO Tony Fernandes now playing a minimal role in AirAsia India, the Tatas have a better say in navigating its aviation business. The low-cost airline had piled up losses. Its revenue dropped 69 percent in the September quarter. While its losses for the second quarter weren't disclosed, in the first, it sank deeper in the red. Its losses zoomed to Rs 332 crore, from Rs 15 crore, a year earlier.

Read more: Tatas need Air India. Can they revive it and their aviation fortunes?

But there is still no word on Singapore Airlines, the partner in Vistara. Tata Sons Chairman N Chandrasekaran would need the support of the partner, both, through a no-objection certificate and through funding and operations help, to make a success of Air India.

“SIA does not comment on investment opportunities, including in India,” the airline told Moneycontrol when asked about its interest in Air India.

The government will on January 5 announce the names of the shortlisted bidders for the flag carrier. Tata Sons is now up against the Air India employee consortium, which is the only other confirmed suitor now.  The third suitor, US-based fund Interups, opted out and proposed to join the employee consortium.

While one can't say for sure if there is any other suitor— there have been many a murmur about another Indian airline—a clearer picture will emerge on January 5. That's when many of the questions may also get their answers.