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(Oct 5): AirAsia Group Bhd is shutting down its affiliated operations in India, the local aviation minister said over the weekend, a comment his office later suggested was taken out of context.
“The AirAsia store is closing anyway,” Hardeep Singh Puri said in televised comments that circulated widely on social media. “Your parent company is in trouble.”
A spokesman for AirAsia India, which is majority-owned by Indian conglomerate Tata Group, declined to comment. A spokesman for the Civil Aviation Ministry said Puri’s comments were taken out of context and he had clarified them immediately.
Once the poster child for the low-cost airline revolution in Asia, AirAsia is looking to raise up to 2.5 billion ringgit by the end of the year as the coronavirus disrupts travel globally. The Subang, Malaysia-based low-cost carrier posted its biggest quarterly loss in August and has said it is evaluating its operations in Japan. A Reuters report earlier this year noted that its operations in India could also be under review.
AirAsia is shutting down its operations in Japan as it grapples with pandemic-related restrictions on global travel, local media reported last week. CEO Tan Sri Tony Fernandes later confirmed that leaving Japan is a possibility.
AirAsia India began flying in 2014 with the promise of breakeven in four months. But it has never made any money in one of the world’s toughest markets, where high fuel taxes and fierce tariffs often make trading unprofitable. The airline, which has a 6.8% market share, employs more than 3,000 people in the country.
Tata Sons is reviewing the joint venture with AirAsia, and is in talks to buy the Malaysian firm’s 49% stake in the Indian subsidiary, the Times of India newspaper reported separately on Monday, citing an unidentified source. AirAsia is not interested in injecting more funds into the company and instead wants it to go into debt, according to the report.
India’s aviation regulator suspended two senior AirAsia India executives in August after a pilot claimed there were security flaws at the airline. Indian officials are also investigating Fernandes and other officials for allegedly paying bribes to influence local politics.
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