The Tata Group, which controls Air India and Vistara through their respective holding companies, has revealed plans to merge the two airlines. Air India’s goal is to expand to compete with airlines operating in the Middle East.
To implement this merger, Air India would acquire Vistara. The latter, held equally by Tata Group (51%) and Singapore Airlines (49%), would provide India’s de facto flag carrier access to its fleet and network. In the future, Tata would hold 74.9 percent of Air India, and the Singaporean airline would possess 25.1 percent of the combined company.
Through this acquisition, Singapore Airlines will be better positioned to participate in India’s booming aviation sector, expand its presence, and improve its multi-hub strategy.
The companies hope to finalise their merger by March 2024, pending the relevant authorities’ permission.
The Vistara airline, a partnership between SIA and Tata, first took flight in January 2015. In January 2022, Tata purchased Air India and immediately began a comprehensive programme of change designed to fortify the company’s foundations, modernise operations, and set it up for future success.
There will be several mutually beneficial effects from a combination between Air India and Vistara. Slots and air traffic rights at local and international airports are extremely precious. Air India possesses them, whereas Vistara does not.
As Vistara is primarily regarded as India’s preeminent full-service airline, Air India stands to gain from its infrastructure, customers, service orientation, and quality of products.
CEO of Singapore Airlines, Goh Choon Phong, said, “Tata Sons is one of India’s most recognised and revered names.” Vistara, the full-service airline we helped develop together, has quickly become an industry leader and received several awards on a worldwide scale.
Together, we will support Air India’s transformation programme, unlock its significant potential, and restore its position as a leading airline on the global stage. “With this merger, we can deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.
In a statement, Tata Sons Chairman Natarajan Chandrasekaran stated, “The merger of Vistara with Air India is a major milestone in our drive to build Air India a genuinely world-class airline.”
“We are excited about the opportunity of creating a strong Air India, which would offer both full-service and low-cost services across domestic and international routes. As part of the transformation, Air India focuses on expanding its network and fleet, revamping its customer proposition, and enhancing safety, reliability, and on-time performance.