Singapore Airlines (SIA) and Tata Sons announced on Tuesday that they have agreed to merge Air India and Vistara, with SIA also investing Rs 2,059 crore in Air India as part of the transaction. This would give SIA a 25.1 per cent stake in an enlarged Air India group with a significant presence in all key market segments. SIA and Tata aim to complete the merger by March 2024, subject to regulatory approvals.
SIA intends to fully fund this investment with its internal cash resources, which stood at S$17.5 billion as of September 30, 2022.
SIA and Tata have also agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India in FY23 and FY24. Based on SIA’s 25.1 per cent stake post-completion, its share of any additional capital injection could be up to Rs 5,020 crore payable only after the completion of the merger.
N Chandrasekaran, Chairman, Tata Sons said: "The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline. We are transforming Air India, with the aim of providing great customer experience, every time, for every customer. 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. We would like to thank Singapore Airlines for their continued partnership.”
Vistara, a 51:49 joint venture between Tata Sons and Singapore Airlines Limited, was established in 2013 and is India’s leading full-service carrier with international operations in Middle East, Asia and Europe.
With this consolidation, Air India shall be India’s leading domestic and international carrier with a combined fleet of 218 aircraft, making it India’s largest international carrier and second largest domestic carrier.
"The combination of Air India and Vistara would bring significant synergies. Air India has valuable slots and air traffic rights at domestic and international airports that are not available to Vistara. With Vistara widely recognised as India’s leading full-service carrier, Air India will benefit from its operational capabilities, customer base, and a strong focus on customer service and product excellence," said Singapore Airlines.
On October 13, SIA said it was in "confidential discussions" with Tata group to explore the possible merger of Vistara and Air India.
Goh Choon Phong, Chief Executive Officer, Singapore Airlines, said: “Tata Sons is one of the most established and respected names in India. 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. We will work together to support Air India’s transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage.”
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. It can optimise its route network and resource utilisation, be flexible and agile in capturing demand across market segments, and tap on a larger consumer base to strengthen its loyalty programme," added SIA.
Currently, Vistara has a fleet of 53 aircraft, including 41 Airbus A320, five Airbus A321neo, five Boeing 737-800NG and two Boeing 787-9 Dreamliner aircraft. The airline has flown more than 35 million customers since starting operations.
Vistara started flying in January 2015. AirAsia India was launched in 2014, while Air India Express began operations back in 2005.
In October, Vistara was the second largest carrier with a domestic market share of 9.2 per cent behind IndiGo, which had a market share of 56.7 per cent.
During the same period, the domestic market share of Air India and AirAsia India stood at 9.2 per cent and 7.6 per cent, respectively.
In terms of On-Time Performance (OTP), Air India was on top at 90.8 per cent, followed by Vistara and AirAsia India, both at 89.1 per cent.
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