The proposed Merger Of Air India and Vistara To Create India's Second Largest Domestic Carrier
With an investment of INR 20,585 million SIA would acquire 25.1 per cent stake in an enlarged Air India group with a significant presence in all key market segments
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Air India and Vistara will be merged as part of an agreement between Singapore Airlines (SIA) and Tata Sons (Tata) by March 2024. With an investment of INR 20,585 million SIA would acquire 25.1 per cent stake in an enlarged Air India group with a significant presence in all key market segments.
Through this transaction, SIA will reinforce its partnership with Tata and the merger would bolster SIA's presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in a large and fast-growing aviation market.
"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," said Goh Choon Phong, CEO, Singapore Airlines in a statement.
"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. We will work together to support Air India's transformation programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage," added the statement.
In January 2022, The Tata group announced the completion of the transaction for the purchase of Air India from the Government of India. Since then, the company has been spreading its wings to expand its aviation empire. "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," said Natarajan Chandrasekaran, Chairman, Tata Sons.
Following its acquisition by Tata, Air India unveiled a wide-ranging transformation programme to strengthen its foundations and revamp its operations, setting it on the road to recovery and positioning it for growth. "Air India aims to have 30 per cent share in domestic and international markets in the next five years. The airline is working on restoring the reputation and there is evidence that progress is being made. Currently, the airline has a domestic market share of 10 per cent and an international market share of 12 per cent," Campbell Wilson had said in an earlier statement.
In order to contribute and help shape the future of the aviation sector, Air India has joined two key industry bodies– in the domestic arena, it has rejoined the Federation of Indian Airlines (FIA) and regionally, Air India has become the first Indian airline to join the Association of Asia Pacific Airlines (AAPA), a trade association for scheduled international airlines based in the Asia Pacific region.
Today, Air India (including Air India Express and AirAsia India) and Vistara have a total of 218 widebody and narrowbody aircraft, serving 38 international and 52 domestic destinations. With the integration, Air India will be the only Indian airline group to operate both full-service and low-cost passenger services. This would reinforce its position as India's largest international carrier and second largest domestic carrier, allow it to offer more options and connectivity for business and leisure customers, and enable it to compete as a leading global airline.