The Air India-Vistara merger has met a minor hurdle with the Competition Commission of India (CCI) issuing a notice asking Air India as to why its proposed Vistara merger should not be investigated. As per sources, Air India has a month’s time to respond to CCI’s notice.
Experts claim that CCI’s move is prompted by concerns of a duopoly emerging in the domestic aviation sector and hence Air India will have to satisfy CCI concerns. Now with CCI raising the issue of market dominance, the Air India- Vistara merger might be delayed.
Air India had planned to complete the merger by March, 2024. Sources claim that the airline views the matter as procedural and is confident of getting the regulator’s nod.
Currently IndiGo has the largest market share with 61.4%. Post Air India-Vistara merger their combined market share will be 18%. Now with the addition of AirAsia India, the market share will rise to 26%. Thus, the two big airlines, Air India and IndiGo will have a combined market share of over 85% between them.
Interestingly IndiGo’s market share has been above 55% since a long time but it has not led to any monopolistic tendency. So CCI does not hold any strong ground to deny the Air India-Vistara merger. Beside the ministry can impose fare caps if and when the air fares rise above acceptable limits.