AirAsia India is an Indo-Malaysian low cost carrier. Announced on 19 February 2013, the airline is a joint venture with Air Asia Berhad holding 49% of the airline, Tata Sons holding 30% and Telestra Tradeplace taking up the remaining 21% in the airline. The joint venture would also mark Tata's return to aviation industry after 60 years. Air Asia India commenced operations on 12 June 2014.
AirAsia is the first foreign airline to set up a subsidiary in India. The airliner will operate with the world's lowest unit cost of 1.25 (2.0¢ US)/available seat kilometer and a passenger break-even load factor of 52%. It will hedge 100% of its fuel requirements for the next three years and plans to achieve an aircraft turnaround time of 25 minutes.
The origins of the airline can be tracked back to October 2012, when AirAsia was keen to open operations based out of India provided the aviation environment and tax structure were conducive and friendly for low-cost airline operations. With the Indian government allowing a foreign direct investment of up to 49%, in February 2013, AirAsia applied to the Indian Foreign Investment Promotion Board (FIPB) to seek approval for commencing its operations in India. AirAsia announced that it would establish a joint venture with Tata Sons and Telestra Tradeplace. Tata sons would represent the airline with two non-executive directors in the airline's board. AirAsia initially planned to begin operations to various tier 2 and tier 3 cities with Chennai International Airport as its main operating base but later shifted its base to Bengaluru, operating its first flight from Bengaluru to Goa. The introduction of AirAsia was expected to cause another price war, ultimately leading to an increase in air traffic and some consolidation in the Indian aviation sector.
AirAsia initially invested an amount of US$50 million in the airline. In preparation for its operations in India, AirAsia struck deals with online and offline travel agents throughout the country. Previously, limited distribution of sales had affected the airline's performance in India and AirAsia wanted to avoid that with its Indian subsidiary by all means. On 3 March 2013, the FIPB officially permitted AirAsia to rent/lease aircraft and to carry cargo on its scheduled flights. The airline then applied for a permission to schedule aircraft and transport passengers, which the FIPB accepted on 6 March. Less than two months after AirAsia announced its plans to start an airline in India, the joint venture was established on 28 March 2013 as AirAsia (India) Pvt. Ltd. In April, the airline started recruiting candidates for their cabin crew, and allowed captains and first officers to apply online for an interview in Bangalore.
As the final procedure to obtain Air Operator Permit, a proving flight was conducted on 1 and 2 May 2014 flying from Chennai to Kochi, Bangalore and Kolkata. On 8 May 2014, the DGCA issued AirAsia India an Air Operator Permit.
On 30 May 2014, AirAsia India announced its maiden flight from Bangalore to Goa; the service started on 12 June.
Prior to the airline's formation, Tony Fernandes announced that he would like Ratan Tata to be the chairman of the airline, however the latter refused, though he later consented to being the Chief Advisor to the AirAsia India management board. On 15 May 2013, AirAsia India appointed management consultant Mittu Chandilya as CEO. A month later, on 17 June, S. Ramadorai, the Non-Executive Vice Chairman of the Indian software firm Tata Consultancy Services, was appointed as the Chairman of the airline.