The Indian conglomerate Tata Group, last evening, filed for approval from India’s anti-trust and competition regulator, the Competition Commission of India, for a merger between Air India and Vistara. The merger was first announced in November 2022. When completed, it will be India’s only full-service carrier unless the resurrection of Jet Airways is completed or another airline comes up with a full-service operation sometime soon.
The merger of Vistara and Air India
The Tata Group ended up making a host of bets in the aviation space over time. They launched a venture with AirAsia (called AirAsia India) in 2013, and in 2014, they came together with Singapore Airlines to launch Vistara (TATA SIA Airlines). Subsequently, in 2022, they acquired Air India and Air India Express.
Since then, they’ve worked to combine AirAsia India and Air India Express into one LCC with domestic and international operations. The paperwork is ongoing, and the airlines operate under their respective codes. Still, many things have been combined, such as social media, online booking and the holding company of the entire operations.
In the case of the Vistara and Air India merger, Tata will hold at least 51% of the total issued and paid-up equity share capital of the merged entity. In comparison, Singapore Airlines will own a 25.1% minority stake, which will be granted to them in exchange for their share in Vistara and a further investment of USD 267 million into the combined entity. The merger is expected to be completed by March 2024, so hopefully, there will be one corporate structure with two AOPs by that date.
When the merger is complete, Vistara will discontinue operations (eventually), and Air India will be the surviving brand. Although, you should continue to see the aircraft of Vistara flying around for years to come because it will take time to send them to the paintshop/hangar and get them reconfigured and painted for the (eventual) Air India branding and LOPA.
It is still unclear if regulatory clearance will be needed from other markets where the operations of Vistara and Air India overlap—for instance, Germany, the United Kingdom, UAE, and Singapore, amongst others.
Bottomline
The Tata Group has applied for a merger of Vistara into Air India, and as a consequence of this move, there will be a situation where one combined airline will be in the coming years. The transaction, of course, needs the blessings of the Competition Commission of India, amongst other regulators. In the end, Air India will be the surviving airline a few years from now, with Vistara being merged.
Could you let me know what you think of the big project, that is, to merge Vistara into Air India?
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So what should be one’s strategy when it comes to Club Vistara?