« Back to articlePrint this article

Cash crunch pushes AirAsia India to take short-term loans of Rs 630 crore

October 03, 2022 12:08 IST

Tata Group-owned AirAsia India, which is in the process of being merged with Air India Express, has taken short-term loans worth Rs 630 crore during the last six months to deal with cash crunch.

Air Asia

Photograph: Olivia Harris/Reuters

AirAsia India has been making losses since its first commercial flight on June 12, 2014.

Its net loss increased by 42 per cent to Rs 2,178 crore in FY22.


Standard Chartered Bank had given Rs 200 crore as short-term loan and Rs 30 crore as overdraft facility to the airline last month, according to documents reviewed by Business Standard (see table).

IndusInd Bank gave Rs 200 crore to the airline in a short-term loan to the airline in June.

Tata Capital gave a short-term loan of Rs 200 crore in April this year.

These short-term loans have been given to the airline at around eight per cent interest rate, according to the documents.

The three financial institutions as well as AirAsia India did not respond to Business Standard’s queries regarding this matter.

After winning the bid in October last year, the Tata Group took control of Air India on January 27.

The Competition Commission of India (CCI) had on June 14 approved Air India’s request to acquire AirAsia India.

Low-cost airline AirAsia India is in the process of being merged with Air India Express, a low-cost subsidiary of Air India that operates flights mainly on Gulf routes.

AirAsia India recorded 5.8 per cent domestic market share in August, according to data of the Directorate General of Civil Aviation (DGCA).

The low-cost carrier currently operates 28 aircraft in its fleet.

Vistara, a 51:49 joint venture of the Tata Group and Singapore Airlines, has also been making losses since its inception.

The Tata Group is yet to take a decision on its merger with Air India.

Both Vistara and Air India are full-service carriers.

The coming years in the Indian aviation industry are likely to see intense competition among carriers with new airline Akasa Air entering the market.

Also, IndiGo is adding capacity and revamped Jet Airways will soon start operating flights.

Aviation consultancy firm CAPA, in its report in April, stated, “We are entering this new period of uncertainty with potentially more airlines (Akasa Air and Jet) than were operating pre-Covid.

"This comes together with the formal entry of Air India Express in the domestic low-cost carriers market strengthened by its likely merger with AirAsia India.”

“This will intensify the hyper-competitive environment — both in the full service and low-cost segments. It will mean that viability remains elusive for most,” it added.

Deepak Patel
Source: source image