Tata Sons & Singapore Airlines To Merge Vistara Into Air India

Tata Sons & Singapore Airlines (SIA) have agreed to merge Air India & Vistara by March 2024. SIA Airlines will invest $250 million (25.1% stake) in Air India.

Air India’s 90-year-old airline’s mascot, the chubby Maharaja, is about to gain weight. The former state-owned airline Air India, which joined Bombay House after it was privatized in January, and Vistara will merge, the Tatas and Singapore International Airlines (SIA) declared on Tuesday.

Also Read: Singapore Airlines, Tata seek Vistara-Air India merger

The combined company will rank as the second-largest domestic airline and the largest international carrier in India.

The new Air India company will include a 25.1% stake for Singapore Airlines (SIA), which owns 49% of Vistara. A $250 million investment in Air India has been announced by SIA.

In order to support the expansion and operations of the combined Air India in 2022–23 and the following fiscal year, SIA and Tata have also committed to taking part in additional capital injections.

The airline said that, depending on its 25.1% ownership of the combined company, it might inject up to Rs 5,020 crore ($615 million).

The four airlines that make up the Tata group are Air India, Air India Express, AirAsia India, and Vistara. In January, the $28 billion conglomerate purchased both Air India and Air India Express.

The Tatas have already begun integrating AirAsia India into Air India Express completely. It stated that it would take around a year to complete integration, whether through a merger or another method.

According to observers, the Tatas could turn Air India Express into a low-cost carrier operating both international and domestic routes after the merger is complete, while the expanded Air India is expected to be a full-service carrier.

The merger, according to N. Chandrasekaran, chairman of the Tata Group, was a significant step in attempts to transform Air India into a “world-class airline.”

According to Chandrasekaran, “Air India is focusing on extending both its network and fleet, redesigning its consumer proposition, and improving safety, dependability, and on-time performance.”

As rumors about the position of Vistara CEO Vinod Kannan spread, it is expected that Air India CEO and MD Campbell Wilson will lead the combined company.

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In an email to Vistara employees, Kannan claimed that the various airlines owned by the Tata group would merge, creating two new companies: Air India and its wholly-owned subsidiary, Air India Express.

According to a statement by Campbell, Vistara has made significant progress over the past eight years. 

The transformation programme for Air India will be strengthened and accelerated by the same skills, people, systems, and processes that made Vistara successful.

According to aviation research and consulting firm CAPA, duopoly is becoming more prevalent in the domestic market. 

The Air India group and IndiGo are the two pillars of a two-pillar system that is emerging in India’s competitive dynamics. 

According to CAPA India, the two carriers should eventually achieve a domestic market share of 75–80%.

The combined market share of Air India and Vistara is anticipated to increase from 37.8% in the 2nd quarter of the current fiscal year to over 50%.

The international market, which has historically been ruled by foreign airlines, will shift back to Indian carriers as a result of this.

Following the merger, Tata will have a fleet of 218 aircraft, divided between Boeing and Airbus, traveling to a total of 52 domestic and 38 international destinations.