Tata LCCs' merger to complete on October 1; mega AI Express to have 100 aircraft by year end

NEW DELHI: India's low cost carrier (LCC) space is in for a major rejig with Tata Group's mega Air India Express coming into being on Oct 1, 2024, when the process of merging erstwhile AirAsia India into it gets completed. The combined entity, with 7,000 employees, as of now has 84 aircraft (mainly Boeing 737s and a few Airbus A320s) and this number will grow to 100 before end of this calendar year.

Erstwhile AirAsia India was Tata Group's re-entry into the airline space for the first time after JRD Tata launching Air India in 1932. It started flying in June 2024 and from Oct 1 its designator code I5 will cease to exist. Tata's other JV airline, Vistara, which had started flying in Jan 2015, merges into AI on Nov 12.

With India the fastest growing aviation market globally, the LCC market here is set to rise exponentially in coming years. "The emergence of LCCs other than IndiGo should not be seen as competition to the latter as the market is too big for all but as choice for consumers. Having a strong alternate means players will have to improve in areas they are weak in. For IndiGo, it means improving the onboard experience for flyers. For AI Express, it means quickly expanding its network, frequencies and connecting city pairs. Akasa is to watch out for if it can arrange funding and get Boeing to deliver the ordered planes on time," said an industry observer.

While market leader IndiGo is way ahead, the Tata LCC will position itself differently to appeal to passengers. "Our two main differentiators are that we have hot meals on board and are less formal on the branding side, appealing more to today's traveller," said officials.

Onboard meals are the biggest chink in IndiGo’s otherwise strong armour. The Big Blue currently has about 340 aircraft; will induct one plane every week for the next 10 years and double its fleet before the end of this decade. It will start getting long-range single aisles next year and then wide-body planes from 2027. It has about 1,000 aircraft on order which are going to be delivered till mid-2030s.

The Tata Group had last Feb placed a $470 billion order for 400 narrow body and 70 wide body aircraft. “There is no doubt that India, like rest of the world, is essentially a low cost market (accounting for over 75 per cent of domestic market share). A majority of the single aisles (190 Boeing 737 MAX & 210 Airbus A320 family) could logically come to AI Express. On a group level, we are going to be 300 plus before the year end (AI and Vistara that merge Nov 12 have 211 planes, including 67 wide bodies, as of now),” said officials.

AI Express has so far got 33 “whitetail” B737 MAX — meaning planes that were made for some other airline but could not be delivered to them — and is to get 17 more before the end of this year. “There will be some lease returns. So end of calendar year, we are looking at a fleet of 100 planes,” said an official.