Air India And Vistara Could Become One By 2023

May 16, 2022 admin 218 Views

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Long before the Tata Group officially took over Air India, whispers about the airline’s possible merger with Vistara began floating around. After all, both have similar business models and operate a similar fleet. And while the Tatas have remained tight-lipped on the merger question, a recent report suggests it might just happen by the end of next year.

Decision by the end of 2023

Air India and Vistara could reportedly become a single entity by the end of next year. A recent report by The Indian Express has further fueled the long-standing speculation that the Tata Group could merge the two full-service carriers into a single airline if everything goes according to the plan.

Sources have revealed to the English daily that Singapore Airlines, which has a 49% share in Vistara, has asked to wait until the end of next year to make a decision about the merger. A person familiar with the matter told The Indian Express,

“The Tatas and Singapore Airlines have discussed the merger possibility earlier this year. SIA had even agreed to join the Tata bid for Air India but because of the pandemic, it decided to back out given its poor financial condition.”

Vistara is jointly owned by the Tata Group and Singapore Airlines in a 51-49% stake ratio. Photo: Airbus

Singapore Airlines is assessing the situation

With a 49% share in Vistara, SIA does have a say in any potential future deal concerning the carrier. But the airline has given its support to the Tatas in the past by waiving the non-compete clause in Vistara’s contract to allow the Tata Group to bid for the national carrier.

The airline is expected to examine all aspects of the merger, including how much equity it will hold in Air India, once a deal is finalized. The source further added,

“SIA has asked for time till the end of 2023 to decide whether it wants to go ahead with the merger or not. What they’re looking for is some stability in their financial condition, and that of Air India’s operations post the disinvestment.”

Many also view the appointment of Air India’s new chief executive, Campbell Wilson, as a positive step that could aid in the merger. After all, Singapore Airlines has nothing but good things to say about Wilson. The carrier’s CEO Goh Choong Phong has commented that although the company is sad to lose an experienced senior executive like Campbell, he goes to Air India with their full blessings.

Campbell is a Singapore Airlines veteran and CEO of its low-cost subsidiary Scoot.

Singapore Airlines wants more time to decide on the merger. Photo: Airbus

The case for a merger

Air India and Vistara are the only two full-service carriers in the country at the moment. Both rely on the Airbus A320 family of aircraft for domestic operations (Vistara also operates a handful of 737s), and both have invested in Boeing’s Dreamliners for long-haul flying, with AI also flying the 777s to the US.

Besides just the optics of two full-service airlines with similar fleet and business models working for the same owner but competing for customers is something that the Tatas would want to avoid in the future.

While nothing about the merger has been officially confirmed by the Tatas, reports like these certainly keep the conversation alive.

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Source: The Indian Express