Tatas likely to offer a stake to Singapore Airlines, for Air India – Vistara merger

Tata Sons, the controlling entity of Air India, Vistara and AirAsia India, is looking to merge the three carriers under a unified Air India banner. To make it work, the Tatas are likely to offer Singapore Airlines (SIA), its joint venture partner in Vistara, a stake in Air India.

The stake offer has been accepted “in-principal” by SIA, which holds a 49% share in Vistara parent Tata SIA Airlines, an ET report on September 23 quoted top executives as saying. Discussions are on between N Chandrasekaran, chairman of both the Tata Group and Air India, and SIA’s executives.

N Chandrasekaran, Tata Sons chairman, had earlier stated that the group’s airline businesses are operating on thin margins, and must be consolidated to ensure operational efficiencies and keep control of costs.

SINGAPORE AIRLINES
A stake in Air India may be offered to Singapore Airlines for the AI-Vistara merger

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Tata Sons and SIA did not respond to queries, the report said. Sources, however, said while SIA could agree to the merge, any financial infusion into Air India was unlikely as the airline is focused on getting its business back on track.

Earlier this year, Singapore Airlines had asked the Tatas to wait for some time before taking any decisions about the merger. Both the Tatas and SIA have discussed such possibilities, and SIA had reportedly even agreed to join the Tata bid for Air India but, because of the pandemic, decided to back out.

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Earlier this week, it was reported that the Tata Group had started an exercise to evaluate options to consolidate AirAsia India and Vistara under Air India. The goal is to bring operational synergies among the three airlines under its umbrella.

If the Air India-Vistara merger goes through, it will make the second-largest airline in the country, behind IndiGo.

If the Air India-Vistara merger goes through, it will make the second-largest airline in the country, behind IndiGo. The Tata Group is also merging the other airline in its fold, AirAsia India, with Air India Express, Air India’s no-frills brand that flies primarily to West Asian and Southeast Asian destinations.

The merger proposal received the Competition Commission of India’s nod in June. Tata Sons holds a majority 83.67% stake in AirAsia India. Its holding in Vistara stands at 51%.

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Air India CEO and MD Campbell Wilson have set up a team under the airline’s director of operations RS Sandhu to conduct the evaluation and submit a plan within one year. The plan is to achieve consolidation of AirAsia India into Air India Express over one year, while also targeting to bring all of the group’s airline businesses under the Air India umbrella by 2024.

AirAsia India
The merger of Air India Express and AirAsia India will start with integrating information technology and passenger booking systems

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Air India, which has been the national carrier for several decades, also enjoys an excellent recall value with travellers in India and overseas. With Vistara and AirAsia having recently commenced international operations, using the brand name ‘Air India’ would most certainly benefit them.

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Sources have said that the merger of Air India Express and AirAsia India will start with integrating information technology and passenger booking systems. The Air India Express system is likely to be moved to AirAsia India’s system, which is said to be better in all aspects. Issues like cabin crew dress and branding are still being discussed at various levels.

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