As Tata Group wins the bid to acquire Air India from the government and looks to tie up the $2.4 billion deal, India’s current largest airline IndiGo anticipates Tata to be a “formidable competition” in the airline industry.
In a pre-recorded interview at CAPA centre for aviation event held today, IndiGo’s Chief Executive Officer Ronojoy Dutta said "I see them as formidable competition but I welcome them. It is a sensible thing.”
Earlier the government had announced that Tata will continue the operations at India’s flag-bearing airline Air India after winning the bid in the divestment process. The acquisition has resulted in Tata owning a 100% stake in Air India as well as a 100% stake in its subsidiary Air India Express which is a low-cost carrier airline. Moreover, it will also own 50% in the joint venture Air India SATS which includes airport services on ground and cargo handling.
Expansion of Domestic Market, Rise in Competition
According to a report from Reuters, currently IndiGo controls the majority of the Indian domestic market. However, its international operations are quite limited as compared to that of Air India. However, Air India has been financially struggling for quite a while but this acquisition is expected to bring stability. Ronojoy Dutta also went on to state that "I think they will become more economically responsible."
He also added, "Having a large player funded by taxpayers is not fair competition for us." With operations of Air India expected to resume without any financial burden, the competition in the domestic market is anticipated to rise. Moreover, billionaire Rakesh Jhunjhunwala is all set to launch his low-cost carrier Akasa Air in the domestic market from the next year adding competition to the market.
In spite of this, Ronojoy Dutta went on to explain how IndiGo has been focusing on narrow-body planes with 7-hour flights domestically and Air India focuses on full long-haul operations which provides room for everybody.
However, on new entrant, Akasa Airlines, one of the cofounders of which is Aditya Ghosh who worked a decade for IndiGo and is also credited for its success, Dutta told that he wasn’t much worried about the competition from them as it would take few years for them to set up their operations.