Malaysian low-cost airline group AirAsia on Tuesday hinted at a potential exit from India, where it operates a joint venture (JV) budget carrier AirAsia India with the Tata Group.
In a statement, Bo Lingam, president (Airlines) of AirAsia Group, said the company’s Japan and India businesses have been “draining cash”, causing the group “much financial stress”.
“Cost containment and reducing cash burns 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 learnt to be in talks with Tata Sons to sell its 49 per cent stake in the JV to the latter. Notably, last month, the Malaysian airline shut its operations in Japan.
According to data provided by the Directorate General of Civil Aviation (DGCA), AirAsia India operated with a 58.4 per cent load factor and had 6 per cent share in the domestic air passenger market during September. The airline carried 2.4 lakh passengers during this period. In comparison, market leader IndiGo, which had a 57.5 per cent market share during September, registered a 65.4 per cent load factor, carrying 22.7 lakh passengers in the month.
In the July-September quarter, AirAsia India recorded 79 per cent rise in the number of passengers carried as against the preceding quarter, whereas AirAsia Thailand saw an increase of 65 per cent and AirAsia Malaysia saw a 36 per cent increase in the same period.
“A detailed network and fleet optimisation strategy has been implemented across the network, putting the right foundations in place for a sustainable and viable future. We continually review our network to ensure we fly the most popular and profitable routes. Asean is where our brand and foothold is strongest and that’s where our immediate focus will lie. Furthermore, our low fares stimulate demand and grow the air travel market such as the recent launch of a number of new domestic routes where we have seen our market share grow,” Lingam said in the statement.
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