Singapore Airlines, Tata seek Vistara-Air India merger

On Thursday, Singapore Airlines (SIA) announced that it is looking into the possibility of merging Vistara Airline with Air India of the Tata Group. SIA owns the remaining 49% of Vistara, with Tata Group owning 51% of the company.

The potential of combining the two airlines is being discussed by SIA and Tata Group for the first time in an official capacity. According to a statement from SIA to the Singapore Stock Exchange, “the conversations seek to extend the existing collaboration between SIA and Tata, and may involve a prospective merging of Vistara and Air India.” 

It continued, “The conversations are ongoing and no final arrangements have been agreed upon by the parties.”

At this time, it is unknown whether new money would be required for Air India or what role, if any, SIA would play in a Vistara-Air India merger. However, SIA’s shift in position is noteworthy because it refused to collaborate with Tata Group when the latter was vying for Air India. 

Tatas had anticipated that SIA would join it and use Vistara to submit a bid for the state-owned carrier. Although SIA objected, it waived the no-compete condition, allowing Tata Group to proceed with its offer for Air India despite SIA’s opposition.

The second-largest airline in the nation after IndiGo would be created by the combination of Vistara and Air India. In addition, the Tata Group is combining Air Asia India and Air India Express. This combination has received the blessing of the Indian Competition Commission.

In order to maintain operational effectiveness and cost management, Tata Sons Chairman N Chandrasekaran has frequently stated that the Group’s aviation companies, which operate on razor-thin margins, must be integrated.

When Tata Group announced Air India’s first significant growth in September, it vowed to add 30 additional aircraft in the following months, increasing its fleet by more than 25%. 25 Airbus narrow-body and five Boeing wide-body aircraft have leases and letters of intent signed by the organisation.