After much roadblock, the Competition Commission of India (CCI) on September 1 approved the merger of Tata Group airlines Vistara and Air India, subject to certain conditions. With this approval, Air India can potentially become country’s largest international carrier and second-largest domestic airline after IndiGo.
“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 anti-trust agency posted ion X, formerly Twitter. It also added that the detailed will follow.
The approval comes after months when CCI in June issued a show cause notice to Air India, seeking clarification on why its proposed merger with Vistara should not be investigated over concerns about competition in the aviation sector.
The development is a major step forward for Tata Group in consolidating its aviation business.
Vistara and Air India, two full-service airlines, are part of the Tata Group. Singapore Airlines (SIA) holds a 49 percent stake in Vistara.
As a part of the deal, SIA would pump into Rs 2,059 crore in the expanded share capital of Air India for a 25.1 percent stake. Tata Sons would own the remaining 74.9 percent stake in the combined entity.
Tata Sons and SIA filed a merger application with the CCI in April this year, mentioning that the proposed merger of Vistara with Air India would not alter the competitive landscape or cause any adverse impact on competition in India. They had expressed hope to seal the merger deal by March 2024.
Through this transaction, SIA will reinforce its partnership with Tata and immediately acquire a strategic stake in an entity that is four to five times larger in scale compared to Vistara.
The merger is expected to bolster SIA’s presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in a large and fast-growing aviation market.
Meanwhile, aviation research and advisory firm CAPA India had earlier said the merger will “redraw market and consumer power in the international arena to Indian carriers”, which has historically been dominated by foreign carriers.
Following the merger, CAPA India says, it expects to see the emergence of Air India as a global network carrier in terms of size, scale and quality “in the next six years”. The airline could garner a market share of “50 percent in international traffic”, it had added.