Tata airlines’ consolidation begins: CCI approves Air India acquiring entire stake in AirAsia India

NEW DELHI: Paving way for consolidation among the four Tata Group airlines, the Competition Commission of India (CCI) approved acquisition of entire shareholding in Air Asia India by Air India.
The Group plans to have AI, which it took over this January, as its flagship carrier and merge the low cost airlines AirAsia India and AI Express. Vistara, Tata’s JV with Singapore Airlines, will continue as a separate carrier for now along with AI.
“CCI approves acquisition of entire shareholding in AirAsia India by Air India, a wholly-owned subsidiary of Tata Sons,” the CCI tweeted on Tuesday.
“The proposed combination relates to the acquisition of the entire equity share capital of AAIPL by AI, an indirect wholly owned subsidiary of Tata Sons Private Limited (TSPL). At present, TSPL holds 83.67% of the equity share capital of AAIPL. The proposed combination is notifiable under… the Competition Act, 2002,” the notification to CCI this April says.
AAIPL is a joint venture in which Tatas have 83.67% stake and the remaining 16.33% switch AirAsia.
“The proposed combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined,” the April notification had said.
Tata Sons have begun the task of consolidating its four airlines through a proposed merger — of AirAsia India Pvt Ltd (AAIPL) with Air India (AI) — and bringing them together under one roof at a seven-lakh-square-feet mega office in Gurgaon.
While IndiGo remains the domestic market leader with a share of almost 54%, AI-AAIPL combine will become the second largest individual airline with a domestic share of almost 16%.
Along with Vistara (where 49% stakeholder Singapore Airlines is yet to agree to a merger with AI), Tata airlines’ combined domestic share will rise to almost 25%.
The group’s fourth airline, AI Express, is primarily an international budget carrier connecting south India to the Gulf and southeast Asia. AAIPL started operating in 2014, a year before the second Tata JV Vistara, and still does not have rights to fly abroad.
The Tata Group has begun move to have greater synergy between its four airlines by shifting them to one mega office at Delhi’s suburb of Gurgaon. Working with Tata Realty, the group is finalising its office requirement and plans to start the transition at the earliest.
“Considering the existing 4 (airlines) and one JV (AI-SATS) as part of the Tata fold, it has been decided that to optimise resources, increase team work and have higher synergies at work, the various entities will move together into a complex in Gurgaon to start with as far as possible in a phased manner. A new office space on NH8 has already been identified where we have an option to lease up to 700,000 sq ft immediately,” a communication sent to the heads of these five Tata aviation entities earlier this year said.
“We now need to finalise our exact space requirement and start planning the transition to this new space immediately. We are targeting to move in the next 2-3 months. For this purpose, to develop the strategy plan, the task has been entrusted to Harpreet A De Singh, ED headquarters, along with the Consultants from Ernst and Young,” it had added.
The entities have been asked to give information about their required office space to this team “in a timely manner, to facilitate this strategic transformation and consolidation at the earliest.” This shift will consolidate Gurgaon’s pre-eminence in Indian aviation as it already houses IndiGo and SpiceJet. Mumbai, one the hub of airline headquarters, now houses few relatively big airlines like GoAir.