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Consolidation begins! Air India and Vistara, two of the airlines of the Tata Group are to be merged, a Tata group announcement today said.
Understandably, in the future, Air India will be the only airline brand under the group, with Air India Express as its low-cost arm. Which will mean that the Vistara and AirAsia India brands will be abandoned.
The statement read,
With a combined fleet of 218 aircraft, Air India will be the largest international airline in India and the second largest domestic airline, according to a group statement.
With international operations in the Middle East, Asia and Europe, Vistara a 51-49 joint venture between Tata Sons and Singapore Airlines is a full-service airline. Now, the Tata group and Singapore Airlines (SIA) have agreed to the merger.
After the merger, Tatas will own 74.9% of the amalgamated company, while holding company SIA will get the remaining 25.1%.
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Currently, Tatas and SIA hold 51% and 49% of Vistara, respectively. The announced merger is expected to be completed by March 2024, after receiving all the necessary authorizations.
After receiving all necessary approvals, Vistara and Air India will merge, according to the company. According to the statement, SIA will invest Rs 2,059 crore in Air India as part of the merger transaction.
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On 27 January 2022, Tata Sons, through its proprietary subsidiary Talace Private Limited, had acquired a 100% stake in Air India from the Government of India.
The Tata Group intends to form Air India as an umbrella carrier through the merger. The Tata Group wants AI to serve as an umbrella provider, with a full-service arm formed by the combination of Vistara and Maharaja and a low-cost arm formed by combining AirAsia India (AAIPL) and AI Express. This is part of the Tata group’s plan to bring the four airlines under a single entity, Air India.
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