The Tata group on Tuesday announced the merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1 per cent stake in Air India, marking a major consolidation in India’s fast-growing aviation space.
The deal, which will make Air India the country’s largest international carrier and second-largest domestic carrier, is expected to be completed by March 2024, subject to regulatory approvals.
Currently, Tata Group owns a 51 per cent stake in Vistara and the rest is with Singapore Airlines (SIA).
Singapore Airlines (SIA) said it would be investing `2,058.5 crore in Air India as part of the merger transaction.
Vistara and Air India are the country’s second and third largest domestic carriers, respectively. Together, their market share stood at 18.3 per cent in October.
Tata Group has not provided any details about the merged entity such as those pertaining to branding, uniforms and frequent flyer programmes, although it seems likely that Vistara as a brand name might not exist in the long run.
Teams are working on various aspects of the merger, including those related to frequent flyer programmes. It will take time before the specifics are finalised. The required changes and announcements will be made in due course, two officials in the know said.
Tata Sons Chairman N Chandrasekaran said the merger of Vistara and Air India is an important milestone in the 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 service across domestic and international routes,” he said.
Currently, Air India offers economy, business and first class seats while Vistara offers economy, premium economy and business classes. Once the consolidation is complete, passengers are expected to have more choices in terms of domestic and international flights in a seamless manner under the Tata group umbrella.
In a release on Tuesday, Tata group said that with the consolidation, Air India would be the country’s leading domestic and international carrier with a combined fleet of 218 aircraft.
At present, Tata group has four airlines under its wings -- Air India, Vistara, AirAsia India and Air India Express, which is focused on low-cost international services.