New Delhi: The Tata Group on Tuesday announced the consolidation of its airlines, Vistara and Air India, by March 2024.
The two airlines will merge, said Tata Sons partner Singapore Airlines limited, after its board approved the deal.
Vistara is a joint venture of Tata Sons Private Limited and Singapore Airlines Limited (SIA), with the Tatas holding 51% stake and Singapore Airlines 49%. The company is registered as TATA SIA Airlines Limited.
As part of the deal, SIA will also pump in $250 million in Air India.
This would give SIA a 25.1 percent stake in an enlarged Air India group with a significant presence in all key market segments, a company release said.
Through this merger, SIA will acquire a stake in an entity that is four to five times larger in scale than Vistara. This will strengthen its presence in India’s large and fast-growing aviation market.
Tata Sons Chairman N. Chandrasekharan said the merger was “an important milestone in our journey to make Air India a truly world-class airline”.
He said: “We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost service across domestic and international routes. We would like to thank Singapore Airlines for their continued partnership.”
SIA Chief Executive Officer Goh Choon Phong felt the merger provided an opportunity to deepen the company’s relationship with Tata and “participate directly in an exciting new growth phase in India’s aviation market”.
He added: “We will work together to support Air India’s transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage.”
Vistara CEO Vinod Kannan said the integration process “would take some time”, and during this phase, “it would be business as usual for all our stakeholders including customers”.
“Air India is a legendary brand with a rich legacy that pioneered civil aviation in India. There is enormous potential for an airline group with the scale and network of the combined entity,” he added.
The agreement is expected to give tough competition to India’s dominant carrier IndiGo, giving the new entity a combined market share of 24% to Indigo’s 56%.
It will also give Tata a fleet of 218 aircraft split between plane-makers Boeing and Airbus, making it India’s largest international carrier and second largest domestic airline.
With the merger, the Tatas will consolidate its brands around full-service Air India and low-cost Air India Express, which is being merged with AirAsia India after Tata bought out former partner AirAsia.
The consolidation will give SIA — which lacks a domestic flying market — a more solid foothold in India.
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