Why compete with yourself? For India’s Tata Group, owning both Air India and Vistara – the country’s two full service carriers – presented precisely that challenge. Now, in cooperation with Singapore Airlines, consolidation is coming. Air India and Vistara will merge, bringing a coherent competitive stance to the market, along with an additional cash infusion to boost operations.
The deal is expected to close by March 2024, pending regulatory approval.
The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline. We are transforming Air India, with the aim of providing great customer experience, every time, for every customer. As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance.– Mr Natarajan Chandrasekaran, Chairman, Tata Sons
Both Tata and Singapore Airlines will also invest a significant amount of new cash to help see the merger through and deliver the desired growth over the coming years.
Singapore Airlines currently owns 49% of Vistara. Under the revised arrangement it will own 25.1% of the combined airlines and sore Airlines will invest $250 million to see the merger through. Should additional cash be needed to facilitate growth through the next two fiscal years Singapore Airlines could contribute up to $615 million more.
With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market. We will work together to support Air India’s transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage.– Mr Goh Choon Phong, Chief Executive Officer, Singapore Airlines
The merged operations will take advantage of Air India’s extensive portfolio of valuable slots and air traffic rights at domestic and international airports that are not available to Vistara. The companies also hope to leverage the operational and service excellence of Vistara across the expanded fleet.
With Air India’s stake in AirAsia India and Air India Express the new company will also hold a position in the rapidly growing – and extremely competitive – Indian LCC market. Singapore Airlines has experience in running such operations, though the history of SilkAir and Scoot have not always been entirely positive.
The combined operations will have a fleet of 218 aircraft (Air India: 113, AirAsia India: 28, Vistara: 53, Air India Express: 24 )serving 38 international and 52 domestic destinations.
And while the Indian market presents significant competition on the LCC side, the full service market does not. Should Jet Airways manage to resolve its funding issues it might resume operations, with a healthy share of nostalgia and brand equity. But it will still have to actually execute to grab that market share back.
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