The Competition Commission of India (CCI) on Friday (September 1) officially approved the merger of Vistara and Air India, both owned by the Tata Group — albeit with certain stipulations. This move will potentially allow Air India to become the country's top international carrier and the second-largest domestic airline, following IndiGo.
The CCI's decision, announced on X (formerly Twitter), comes after months of scrutiny.
In June, the anti-trust agency had raised concerns about competition in the aviation sector and issued a show cause notice to Air India, asking for clarification on why the Vistara merger shouldn't be investigated.
The development is a major step forward for Tata Group in consolidating its aviation business. Vistara and Air India are both full-service airlines under the Tata Group's umbrella, with
Singapore Airlines (SIA) holding a substantial 49 percent stake in Vistara.
Under the merger agreement, SIA will invest Rs 2,059 crore in Air India's expanded share capital, securing a 25.1 percent stake. Tata Sons will retain the remaining 74.9 percent ownership of the combined entity.
The approval for the proposed combination was sought from CCI in April this year, asserting that the Vistara-Air India merger wouldn't harm competition within India's aviation sector. They had expressed hope to seal the merger deal by March 2024.
This deal strengthens SIA's partnership with Tata and provides them with a strategic stake in a significantly larger entity compared to Vistara. It will enhance SIA's presence in India, support its multi-hub strategy, and keep it actively engaged in the growing
Indian aviation market.
Additionally, aviation research and advisory firm CAPA India sees this merger as a game-changer, predicting that Air India will emerge as a global network carrier within the next six years. The airline could garner a substantial 50 percent market share in international air traffic, it said.
