Last year, the Tata group
had explored investing in Jet Airways
but had shelved the plans with sources citing legacy issues and the need for a forensic audit. The grounding of Jet Airways
in April has freed up slots at airports and the group is keen to capitalise on the opportunity.
Tata Sons, the group’s holding company, has cleared fund allocation for Vistara
and AirAsia, which will allow them to increase their fleet size and grow market share.
“The capital allocation for Vistara
is already cleared, and the idea is to gain market share steadily,” a source said, adding: “With both airlines
doing well, the group doesn’t need a third.”
The high debt of AI, at about Rs 50,000 crore, was a major concern for the group while bidding in the first round.
Since then, the government has transferred around Rs 30,000 crore of debt to an asset-holding company, which will sell real estate and other assets to raise funds.
Currently, Vistara and AirAsia India have 29 and 21 planes, respectively, and the plan is for both airlines
to have around 40 planes each by the end of this fiscal year. Both airlines
have a cumulative market share of 11 per cent while market leader IndiGo controls almost 49 per cent of the Indian market. Air India’s market share is around 13.5 per cent.