British Airways issues second EETC; AirAsia enters digital payments arena
16th March 2018
The much-awaited merger of Vistara with Air India is finally happening along with Air India’s plans of consolidating all its airlines under one umbrella to form an enlarged Air India Group. The Board of Singapore Airlines (SIA) have agreed with Tata Sons to merge Air India with Vistara. Going ahead, SIA will invest $250 million in Air India gaining a stake of 25.1% in the enlarged Group while Tata Sons will hold 74.9% stake. The new Air India is estimated to be valued at $1bn.
The merger is expected to be completed by March 2024, subject to regulatory approvals.
According to the statement issued by SIA, both entities have agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India in FY2022-23 and FY2023-24.
"Based on SIA’s 25.1% stake post-completion, its share of any additional capital injection could be up to $615 million, payable only after the completion of the merger," SIA said in a statement.
Commenting on the Air India-Vistara merger, Tata Sons chairman N Chandrasekharan said: "It is an important milestone in our journey to make Air India a truly world-class airline. We are excited about 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 its continued partnership.”
Goh Choon Phong, chief executive officer, SIA was quoted in the statement: “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. The merger provides an opportunity to deepen the company's 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.”
The actual amount of capital injection will depend on factors such as Air India’s business plan and its access to other funding options, the release said, further adding that SIA intends to fully fund any additional capital injections with its internal cash resources.
The Tata Group has previously stated that it has always believed in consolidating its airline business for operational efficiency and cost control and since the acquisition of Air India in January 2022, the Tata Group has been insisting SIA to agree to merge Vistara with Air India.
Vinod Kannan, CEO of, Vistara said: “The integration process will take some time, and during this phase, it will be business as usual for all our stakeholders including customers. Air India is a legendary brand with a rich legacy that pioneered civil aviation in India. There is enormous potential for an airline group with the scale and network of the combined entity.”
Through this transaction, SIA will reinforce its partnership with Tata and immediately acquire a strategic stake in an entity that is four to five times larger in scale compared to Vistara.
The merger is expected to 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.
While Vistara will benefit from all of Air India’s valuable slots and air traffic rights at domestic and international airports Air India will have Vistara’s operational capabilities, customer base, and a strong focus on customer service.
According to the data shared by the Directorate General of Civil Aviation (DGCA, India) in October 2022, Air India, Vistara, and AirAsia India had an aggregate market share of 25.9%.
The Tata group is already in the process of merging Air India Express and AirAsia India into one entity to provide low-cost flight options.
The enlarged Air India group will have Air India, Vistara, AirAsia India, and Air India Express, thus making Air India the second-largest airline in India in terms of fleet capacity and market share. Post-merger, Air India will have 233 aircraft in its fleet. This merger will inch Air India closer to IndiGo in terms of fleet size, with IndiGo having 285 planes. With both airlines planning robust fleet expansion in next few months, the competition in Indian civil aviation sector will get more interesting as time unfolds.