The merger of Air India-Vistara to have clarity soon

Tata Sons are the holding company of the Tata Group, which took over Air India from the government earlier this year. Ever since Tata Sons acquired Air India, there have been talks of a possible merger between the two airlines, both owned by the group.

Tata Sons have held exploratory talks with Singapore Airlines (SIA), its joint-venture partner in Vistara, for a potential merger of the airline with Air India.

Vistara is a joint venture between Tata Sons (51%) and Singapore Airlines (49%). The airline carried 1.01 million passengers and became the second largest airline by market share in July.

Vistara’s CEO Vinod Kannan gave an update about the merger in a recent interview.

But Vistara is jointly owned by Singapore Airlines, which remained quite bullish about its prospects in India, and which is why the merger depends on Singapore’s Competition Commission being convinced about the cleanliness of the deal.

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Vinod Kannan, the CEO of Vistara said in an interview that they were already at a pre-Covid level in November last year and currently are 25% more than the pre-Covid level.

“All possibilities are being discussed. Since we are a joint venture, the two shareholders will have to discuss a road-map for the future. Whether it’s going to be a merger, or we will have two separate airlines are all options that are still on the table.

However, if this leads to a commercial agreement such as a codeshare or an interline agreement (something that allows passengers to book connecting flights across two airlines) will probably be the next step, which we have not started discussing.

Air India and Vistara are still independent entities until a decision is made on how they will work together. We do not have any code share with Air India but we have started working on those lines by having the ‘flight interruption agreement’ (that allows the two airlines to offer first available alternative flights in case of a disruption, to lessen passenger inconvenience).

To be sure, the discussions have begun and according to me, we should have a clarity on this in the next few months.”

Vinod Kannan, CEO, Vistara

The Tata Group won the bid to acquire Air India in October 2021, and the airline was transferred to its new owner in January. Vistara was launched in 2015.

While Vistara has been established as a premium airline brand in the domestic segment, Air India’s strength lies in the international markets, especially the US and Europe. Currently, Air India is the only Indian carrier that flies to the US; Air India and Vistara are the only ones that fly to Europe.

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(With Inputs from The Hindustan Times)