Air India-Vistara merger: Tata Sons could offer SIA a stake in AI

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.
AI_Vistara

Air India-Vistara merger: Tata Sons could offer SIA a stake in AI

New Delhi: As part of the negotiations for the merger of their joint venture carrier Vistara with Air India, the Tata Group could offer a stake in Air India to Singapore Airlines (SIA). According to top executives close to the matter, SIA, which owns 49 per cent in Vistara's parent Tata SIA Airlines, has agreed "in principle" to the proposal. 51 per cent stake in the full-service airline is held by the Tatas.
Tata Sons is looking to merge the two entities so as to make the national carrier it recently acquired the only airline brand under its fold. Talks on the merger are being headed by Tata Group and Air India chairman N Chandrasekaran and SIA's top brass, the top executives told Economic Times, adding that SIA is unlikely to commit any significant funds into Air India yet.
Speaking on the matter, a Singapore Airlines spokesperson said, "We do not comment on any confidential discussions that we may or may not be having with our partners."
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 had received the Competition Commission of India’s nod in June.
Experts are of the view that the group's airline business must be consolidated to ensure operational efficiencies and keep control on costs. "It makes imminent sense to consolidate similar businesses under the same brand," said Vihang Virkar, partner at Lumiere Law Partners.
"Consolidating the three airlines - AirAsia, Vistara and Air India - would not only provide the Tatas with greater operational efficiency, but they will also be able to benefit from better bargaining power in their dealings with OEMs such as aircraft and engine manufacturers," Virkar added.
Air India, having 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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