Tata Sons is still working on how to operate its two low-cost carriers, with a merger of AirAsia India (I5, Bangalore Int'l) into Air India Express (IX, Mumbai Int'l) the most likely option, an unnamed source close to the matter told The Economic Times. However, the completion of the handover of Air India (AI, Mumbai Int'l) and its subsidiaries from state to conglomerate may be delayed.

Tata Sons aims to merge AirAsia India - which operates only domestic routes but which is closing in on obtaining international flying rights - into Air India Express, a budget carrier specialising in short-haul international routes. Yet it may retain many of the two carriers' characteristics, including their fleets.

“The plan on the table is to operate the existing AirAsia India fleet on its domestic routes and also to provide domestic connections to the current Air India Express international network,” the source explained. “The plan is also to keep both the Airbus and Boeing fleets running.”

According to the ch-aviation fleets advanced module, while Air India Express currently operates a fleet of twenty-four B737-800s, AirAsia India operates twenty-eight A320-200s and five A320-200Ns, with eight A321-200NXs to be delivered.

Nevertheless, Air India Express is likely to shift to AirAsia India’s reservation system model. Like many other LCCs, AirAsia India avoids paying commission to travel agents and does not use or participate in global reservation systems.

“The plan is also to offer similar branding, food menus, and other services,” the source added.

Meanwhile, on December 27, the Press Trust of India news agency quoted unnamed government officials as saying that the handover of Air India to Tata Sons would be delayed by one month until the end of January.

It had already been reported, again by unnamed sources, that with the transaction expected to conclude by December, Tata could take full control of the flag carrier as well as Air India Express and airport services and groundhandling firm Air India SATS by the “long stop date” of January 23, 2022.

Now, sources told the news agency that certain regulatory approvals are yet to materialise for the handover and that other formalities have not been completed. The cash component would be completed once these elements of the handover process take place. Tata Sons will pay the government INR27 billion rupees (USD360 million) in cash while retaining INR153 billion (USD2.04 billion) to cover the segment of the airline’s debt pile it will inherit. According to the contract, all formalities would have to be completed within eight weeks, but this date can be mutually extended by buyer and seller - which will be done in this case, the officials said.