Malaysian budget airline group AirAsia hinted Tuesday about a potential exit from India, where it operates a joint venture (JV) low cost airline AirAsia India with the Tata Group.
In a statement, Bo Lingam, president (Airlines) of AirAsia Group, said the company’s activities in Japan and India had “drained money”, causing the group “a lot of financial stress.”
“Containing costs and reducing cash expenses remain key priorities, evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” he said. AirAsia Group is reportedly in talks with Tata Sons to sell its 49% stake in the JV to the latter. Notably, last month the Malaysian airline shut down its operations in Japan.
According to data provided by the Directorate General of Civil Aviation (DGCA), AirAsia India operated with a load factor of 58.4% and held 6% of the domestic air passenger market in September. The airline carried 2.4 lakh of passengers during this period. By comparison, market leader IndiGo, which held a 57.5% market share in September, recorded a load factor of 65.4%, carrying 22.7 lakh of passengers during the month.
During the July-September quarter, AirAsia India recorded a 79% increase in the number of passengers carried over the previous quarter, while AirAsia Thailand recorded an increase of 65% and AirAsia Malaysia recorded an increase of 36%. during the same period.
“A detailed network and fleet optimization strategy has been implemented across the network, laying the right foundations for a sustainable and viable future. We continually review our network to ensure we are making the most popular and profitable routes. Asean is where our brand and our presence are strongest and that is where our immediate focus will be. In addition, our low fares are stimulating demand and growing the air travel market, such as the recent launch of a number of new domestic routes where we have seen our market share increase, ”Lingam said in the statement.