Singapore Airlines, Tata Sons agree to merge Air India and Vistara

Singapore’s flag carrier airline Singapore Airlines and Tata Sons, the parent company of the Tata Group, will merge Air India and Vistara to establish an enlarged airline group in India.

Post-merger, Singapore Airlines is expected to increase its presence in India and advance its multi-hub approach while Air India is expected to benefit from Vistara’s operational capabilities and customer base.

As part of the agreement, Singapore Airlines will invest INR 20,585 million ($250 million) in Air India to acquire a stake of 25.1% in a combined Air India group.

Goh Choon Phong — Singapore Airlines CEO said: “Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time.

“With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.”

Singapore Airlines, Tata Sons agree to merge Air India and Vistara. Photo courtesy of Venkat Mangudi/Wikipedia.org.

Singapore Airlines anticipates funding the investment in Air India via its internal cash resources, which as on 30 September 2022, was S$17.5 billion.

Natarajan Chandrasekaran — Tata Sons Chairman said: “The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline.

“As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance.

“We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes.”

Subject to regulatory approvals, the merger is anticipated to complete by March 2024.

Vistara, a full-service carrier, was founded in 2013 as a joint venture between Tata Sons (51%) and Singapore Airlines (49%). On the other hand, Air India was acquired by Tata Group for $2.4 billion in January 2022.

Air India, including Air India Express and AirAsia India, and Vistara, have a total of 218 widebody and narrowbody aircraft, and cater to 52 national and 38 international destinations.

Recently, Tata Sons, through Air India, agreed to acquire the remaining 16.67% stake in AirAsia India from AirAsia Aviation, the holding company of Capital A’s airline group, for INR 155.65 crores.