Reports: Air India and Vistara to merge; Singapore Airlines to stay on board

Since October 2021 (or January 2022, depending on where you count from), one of the big questions on the mind of everyone tracking aviation in India has been the future of Vistara.

Back in the day, the Tata Group hedged their bets and entered the no-frill and full-service space with AirAsia India and Vistara. However, with the acquisition of Air India (which came with its subsidiary Air India Express), the Tata Group now has its hands in four airlines, which, of course, leads to overlaps and cost inefficiencies, amongst other things.

Vistara and Air India Merger on the cards

Air India is putting to bed all the questions around the overlapping entities as they untangle them along the way. Earlier on, they announced that Air India Express and AirAsia India would be combined and that the remaining equity of AirAsia Express was going to be acquired by Air India instead of Tata Sons (which have 80%+ of equity already in their name).

However, the question of Vistara’s merger with Air India was slightly complicated. From the looks of it, Singapore Airlines did not want to play a part in the privatisation of Air India, where they were offered a seat on the table, as significant resources were already sunk into Vistara for them. So, the Tata Group went on with the acquisition of Air India themselves and decided to close the gap with Singapore Airlines later.

Singapore Airlines, in October 2022,  indicated that it was having discussions with Tatas about the future of Vistara through an exchange disclosure. At the time, it said,

In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India Ltd, a subsidiary of Tata (the “Potential Transaction”). The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India.

By many indications, an announcement is coming soon. The Times of India aviation reporter Saurabh Sinha filed a report today. He mentions that an announcement could be around the corner and that Singapore Airlines will get about 25% of the equity in the merged entity. Although I believe the stake could be more in the region of 20-24% for Singapore Airlines or 26%, purely depending on how the two sides agree on the participation of Singapore Airlines in the merged entity (active or passive).

The merger of the two entities is, of course, a long-drawn process and won’t happen at the flick of a switch. They will need to go through various regulatory processes. As things stand, aviation mergers or acquisitions in India are a lot of mess (think Kingfisher/Deccan, Jet Airways/JetLite, Air India/Indian Airlines, et al.). So I hope there is a crack team on standby to make this work.

Inside Vistara, it has been business as usual, with the airline focusing on new route launches at the moment and the addition of capacity to the carrier.

Bottomline

Vistara and Air India could be operating under one brand name sometime soon. The two shareholders are at the table right now discussing the nitty gritty, and we could expect to hear about a deal sooner than later.

What do you make of the impending merger of Air India and Vistara? What do you think will be the pain points? Leave them in the comments, and I’ll try to address them in a separate post.


Liked our articles and our efforts? Please pay an amount you are comfortable with; an amount you believe is the fair price for the content you have consumed. Please enter an amount in the box below and click on the button to pay; you can use Netbanking, Debit/Credit Cards, UPI, QR codes, or any Wallet to pay. Every contribution helps cover the cost of the content generated for your benefit.

(Important: to receive confirmation and details of your transaction, please enter a valid email address in the pop-up form that will appear after you click the ‘Pay Now’ button. For international transactions, use Paypal to process the transaction.)

We are not putting our articles behind any paywall where you are asked to pay before you read an article. We are asking you to pay after you have read the article if you are satisfied with the quality and our efforts.

About Ajay

Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe. Ajay is a frequent contributor and commentator on the media as well, including ET Now, BBC, CNBC TV18, NDTV, Conde Nast Traveller and many other outlets.

More articles by Ajay »

Comments

  1. The merger should be win win situation for both airlines and the customers. Imagine being able to travel from North America to your final destination in India on a single ticket, without worrying about the baggage collection and rechecking at Indian port of entry city like Delhi or Mumbai. I just hope that the additional ticket price for the domestic leg will be reasonable.

Leave a Reply

Your email address will not be published.