The Competition Commission of India (CCI) has given a nod for Vistara’s merger with Air India. 

“CCI approves the merger of Tata SIA Airlines into Air India, and acquisition of certain shareholding by Singapore Airlines (SIA) in Air India subject to compliance of voluntary commitments offered by the parties,” the Competition Commission of India said in a statement.

Vistara, which is a joint venture (JV) between Tata Group and Singapore Airlines. The airline was started in 2015. The Tata Group had said that it will merge Vistara with Air India and Air Asia India with Air India Express to eventually have one full service carrier Air India and one Low Cost Carrier Air India Express.

Earlier this year, the CCI had put the merger under scrutiny. businessline spoke to multiple sources. The first person said that the voluntary commitments offered by Air India included divestiture of slots on certain routes on overlapping routes. It also includes keeping capacity intact on India-Singapore and certain domestic routes where there is overlap of services between Air India and Vistara, said a source aware of the matter.

Merger concerns

“The commission was concerned that a merger could lead to a reduction of capacity and increase in fares. Air India has given commitment it will not cut or reduce capacity. On the contrary the plan is to add flights,” the source added.

Tata Sons-run had conveyed to the antitrust regulator Competition Commission of India (CCI) that a proposed merger of the two will not impact competition adversely as rivals are present on most routes that the combined entity will fly, according to a report.

With the CCI approval in place Air India and Vistara will start the process to align schedules and networks. The two sides will also undertake alignment of reservation systems, loyalty programmes among other things.

Approval will also be required from National Company Law Tribunal and other regulatory authorities and full merger is expected by next June.

 The CCI approval has come subject to compliance of voluntary commitments offered by the parties. Air India has taken a commitment to make tweaks to its plan, said source.

However legal experts felt that this approval may face legal scrutiny as the CCI is currently inquorate (it has only Chairperson and one Member). Indications are that the CCI has invoked the doctrine of necessity to approve this combination.

Tatas re-entered into the airline market in 2013 with Vistara & AirAsia India. Vistara is a 51:49 joint venture between Tata Sons Private Limited and Singapore Airlines Limited (SIA). Last year in January, the Tata Group also acquired Air India and Air India Express.

 In November last year, the Tata Group and SIA, said that the latter would dilute its stake in Vistara. As part of the merger transaction, Singapore Airlines (SIA), which currently holds 49 per cent in Vistara, will invest  per cent ₹2,059 crore to get 25.1 per cent in the merged Air India. The companies had then said that the consolidation of Vistara with Air India by March 2024. 

According to the DGCA data for July, Vistara has an 8.4 per cent market share whereas Air India has a market share of 9.9 per cent. Air Asia has a 7.5 per cent stake. Together, Air India could have over 30 per cent market share of the Indian skies-second to IndiGo which has a market share of 63 per cent.

.As per the latest available Vistara has 5500+ employees including 2500 pilots and cabin crews. In the previous fiscal alone, the airline hired over 2,100 employees in the reporting fiscal. The airline currently has a fleet of 53 aircraft, including 42 Airbus A320neo, six Airbus A321, two Boeing 737-800NG and three Boeing 787-9 Dreamliner aircraft and has flown more than 42 million customers since starting operations.

Earlier this year, the Tata-owned Air India, which recently announced a massive order of 470 aircraft with Boeing and Airbus, now plans to hire over 4,200 cabin crew trainees and 900 pilots this year.

(with inputs from Srivats Krishnaswamy)

Related Topics
comment COMMENT NOW