New Delhi: Vistara, AirAsia India and Air India Express will soon be merged into the Air India brand as Tata Sons has commenced the consolidation process of its airline entities. The move comes after rounds of discussions with Singapore Airlines (SIA), Tata’s joint venture partner in Vistara.
The consolidation, once complete, will make Air India the second largest airline in the country in terms of fleet and market share. Tata formally took over the carrier in January this year after winning the bid for Air India last year.
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Under the Air India brand, the Tata Group will operate a low-cost and a full-service airline, which will be Tata’s only airline brand post the merger, executives in the know of it told Economic Times, adding that a formal announcement could be made within a week.
This comes after Tata Sons earlier this month completed the merger of Air India Express and AirAsia India by acquiring the remaining 16 per cent stake of the Malaysian airline. Now, Tata Singapore Airlines, which runs Vistara, is being consolidated into Air India, the executives shared.
Moreover, post the merger of Tata Sons’ airline business, the Vistara brand might even be shelved with SIA, which owns 49 per cent in Vistara’s parent – Tata SIA Airlines, becoming a minority shareholder in Air India. SIA could have 20-25 per cent stake and a few Vistara board members on board of Air India, according to the executives.
“SIA has reaped benefits from Vistara and realises that the cost of scaling up Vistara will be significantly higher as compared to Air India, which already has a significant size. They did not participate in the bidding process for Air India as Covid-19 had a significant impact on their business,” said a person in the know of the deal.
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Tata Sons have the majority 51 per cent stake in Vistara.
Tata airlines under Air India
Air India CEO Campbell Wilson, chief commercial officer Nipun Aggarwal, AirAsia India CEO Sunil Bhaskaran and Air India Express CEO Aloke Singh are spearheading the merger process which could be completed in the next one year.
With this consolidation, Air India will get even more powered with a fleet of around 233 aircraft and see a decrease in its operational costs. In addition to this, the merger will also boost the carrier’s bargaining power in its dealings with original equipment manufacturers (OEMs) like aircraft and engine manufacturers.
According to the executives, Tata Group and Air India chairman N Chandrasekaran, and the SIA and Air Asia top brass have agreed upon a structure of the consolidation.
