Vistata: CCI gives conditional nod for FSC merger for mega AI

NEW DELHI: Paving the way for a mega desi full service carrier, the Competition Commission of India on Friday approved the merger of Vistara into Air India. Vistara is 51% owned by Tatas and 49% by Singapore Airlines. Post merger, SIA will have 25.1% stake in the new Air India and Tatas the rest. CCI on Friday also approved “acquisition of certain shareholding by SIA in AI subject to compliance of voluntary commitments offered by the parties.”
The Tatas plan to have a mega full service carrier (FSC), AI, and a big low cost carrier (LCC) by integrating AirAsia India (now AIX Connect) into AI Express. While the LCC merger has been approved by CCI and is on track for this year end, the FSC merger has to be completed by next March. The merged entities will become number two in domestic skies behind IndiGo and number one for international traffic. Both IndiGo and AI have 970 (all single aisles) and 470 (mix of single and twin aisles) aircraft on order, respectively, and huge growth plans.

Regarding Vistara-AI merger, CCI said in a statement: “The proposed combination envisages… in consideration of the merger, acquisition of shares in the merged entity by SIA and Tata Sons and acquisition of additional shares in the merged entity by SIA pursuant to a preferential allotment.” SIA will invest Rs 2,059 crore in AI.
The big concern from passengers’ perspective has been that given AI’s narrow and wide body fleet upgrade will still take several months, Vistara’s premium product could be missed till that happens. Allaying those fears, Vistara CEO Vinod Kannan had told TOI recently that: “We want to assure our patrons that they will not be forced to settle for an inferior product. They will not be shifted to anything that is a sub-par product and that their expectations from Vistara will be met by the merged airline.”
AI has been inducting new wide bodies as an interim arrangement till its ordered twin aisles start joining the fleet. The airline will get 20 modern wide bodies by March 2024 — six new Airbus A350s and 14 Boeing 777s. And then, the airline will begin the overhaul of its old wide body fleet of Boeing 777s and 787s under a $400 million project.