On November 11, the nearly decade-old joint venture between Tata Sons and Singapore Airlines, Vistara, will officially cease to operate under its name, marking the completion of its merger with Air India.
This significant consolidation within India’s aviation sector combines the strengths of two major airlines under Tata Group’s ownership, positioning the newly formed entity as a formidable competitor both domestically and internationally.
The Indian government recently approved Singapore Airlines’ Rs 2,059 crore foreign direct investment (FDI) in the expanded Air India Group, paving the way for the merger.
As part of this deal, Singapore Airlines will acquire a 25.1% stake in Air India, a move that is expected to be finalized by the end of this year.
This merger will create one of the world’s largest airline groups, streamlining operations, creating synergies, and enhancing the group’s ability to compete on a global scale.
Vistara CEO Vinod Kannan said the merger is about offering passengers more choice with a larger fleet and a wider network while elevating the overall travel experience.
Air India CEO and MD Campbell Wilson said,
“Cross-functional teams from Air India and Vistara have been working together for many months to make the transition of aircraft, flying crew, ground-based colleagues and, most importantly, our valued customers, into the new Air India as seamless as possible.”
Invezz takes a look at how the conclusion of the merger impacts customers, employees, and competition in Indian skies
Why the merger?
Vistara, a joint venture between Tata Sons and Singapore Airlines, has established itself as a premium full-service airline, known for its focus on quality and service.
Meanwhile, Air India, with its vast network and legacy status, has faced financial challenges but maintains a strong global presence.
The merger aims to combine Vistara’s service excellence with Air India’s scale and reach, creating operational efficiencies, reducing route duplication, and optimizing the combined fleet.
Source:Business Standard
This strategic move will allow the Tata Group to streamline its airline operations, reduce costs, and leverage Air India’s international slots and bilateral rights.
The merger will result in the combined entity becoming India’s largest international carrier and the second-largest domestic carrier, enhancing its ability to compete with airlines like IndiGo and challenge global carriers in the long-haul segment.
How will flyers be impacted?
For passengers with bookings on Vistara flights scheduled until November 11, operations will proceed as usual.
However, flights scheduled from November 12 onwards will be operated by Air India.
Existing Vistara bookings during this period will automatically be converted to Air India flights, with new electronic tickets issued.
This transition will be phased in during September, and customers will be notified individually.
Starting September 3, Vistara flights for travel beyond November 11 will no longer be available for booking through Vistara and must be booked via Air India.
However, bookings for Vistara flights on or before November 11 can still be made through the Vistara website.
Initially, there won’t be significant changes in product and service offerings.
Although the flights will operate under the Air India brand from November 12, they will largely retain Vistara’s aircraft and crew until early 2025.
Over time, as the integration progresses, Air India’s ongoing fleet modernization and the addition of premium economy class will further align the offerings with Vistara’s standards.
600 non-flying staff to be affected
According to a Business Standard report, around 500-600 non-flying employees out of the combined workforce of 18,000 may face retirement or separation as part of the merger.
The Tata Group has stated its commitment to mitigating the impact on these employees, directing efforts towards securing employment opportunities within Air India and other Tata Group companies.
Cabin crew and pilots are not expected to face job losses due to the merger.
Impact of merger on competition in the India aviation sector
The Competition Commission of India (CCI) observed that the merger could increase market concentration, leading to a duopoly structure on certain domestic and international routes and a “near monopoly” on some routes between India and Singapore.
The merged entity could potentially raise prices on these routes.
Source: Business Today
Despite IndiGo’s presence, the CCI noted that the two airlines are the only players offering business-class service on domestic routes, which could result in a monopoly in that segment.
However, the CCI approved the merger, subject to compliance with voluntary commitments offered by the parties involved.
The post Air India-Vistara merger: What’s next for the combined airline giant? appeared first on Invezz
