AirAsia stops inflow of cash to Indian operations, Tata Group weighing its options

COVID-19 continues to chew up and spit out industry after industry, airlines among the hardest-hit

Airlines COVID-19 Business

One of the worst-hit industries due to the pandemic COVID-19 is passenger airlines. The entire industry is based on moving individuals from one place to another and this is the thing that had to be forbidden in due prevent the pandemic from spreading.

All airlines are facing financial problems because the costs of keeping idle are extremely high for this industry. And business has been almost nil from last six months. AirAsia, a global airlines company, has stopped inflow of cash to its Indian operations.

AirAsia began its operations in India in 2014 with a plan to breakeven in the first four months of flying. Almost six years later, the company has yet show green in its accounting books. Still, the company enjoys a 6.8% market share and is providing livelihood to about 3,000 people.

Tata Group holds a majority stake in the airline at 51%. Tata Group has provided emergency funding of $41 million to tide over the liquidity crunch brought on by the lockdown, but there has been no commitment for a full rescue, as informed by people who wish to remain anonymous.

Even though suggestions were made by the Indian government that the Indian arm of AirAsia was closing business in the Indian arm, the comment seems to have been taken out of context. Also, the Japanese arm of the company has also immediately ceased operations.

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Tata itself is weighing the options before it. Tata may look to buy out AirAsia and save the carrier. The Tata Group also has a controlling stake of 51% in another airline company Vistara full-service airline venture with Singapore Airlines Ltd.

 Usually, innovative solutions and new technologies disrupt a market, but the last six months have had a disease – communicable and fatal – rewrite almost every business. Airlines serve a purpose, a purpose which cannot be superseded by any level of sophistication in telecommunications. There is no substitute for physically moving a person from one place to another. How the companies will survive the drought of customers to come out alive at the other side of COVID-19 remains to be seen.


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