Air India Express, a state-backed airplane company, had looked into operational expansion in the Indian domestic market. Three budget carriers dominate the market in the county and AirAsia India had expected to compete by year's end.

The flag carrier had recently set up a committee to explore the feasibility of its planned domestic expansion. The same committee would also review the routes of AirAsia aircrafts given its local growth.

According to Air India Express sources that told PTI, "Air India has set up a committee and mandated it to explore the possibilities of Air India expanding its operations in the LCC (low-cost carrier) segment."

Air India Express began its operations in 2005 and served as the international budget arm of Air India. The company currently operates 172 flights a week across Southeast Asia and the Gulf. Air India also has a total fleet of 21 Boeing 737-800s. Furthermore, the airline command around 5 to 6 percent market share.