Tata Sons have begun moving the pieces together for consolidating all its airlines – Air India Express, Vistara, and Air Asia India under one brand name – Air India. Post the consolidation, Tatas will own one low-cost carrier and one full-service carrier under Air India 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.
According to industry insiders, the merger is set to happen within a month of the Tata group completing the consolidation of Air India Express and AirAsia India. Last week the Tata Group took over Air Asia India by buying the remaining 16% shares in the airline.
As per the Economic Times report, the Tatas have been negotiating with Singapore Airlines (SIA) for weeks now. According to sources, the Vistara brand might be completely dropped after the merger and the SIA will remain a minority shareholder in Air India with 20-25% of shares and the inclusion of a few Vistara board members on the Air India panel. Tatas hold 51% stake in Vistara.
Sources also claim that the deal is almost finalised by Tata group and Air India Chairman N Chandrasekaran and the SIA and Air Asia top management.
It has also come to light that SIA agreed to become part merger only because India is a key market for the airline. “SIA has reaped benefits from Vistara and realises that the cost of scaling up Vistara will be significantly higher as compared to Air India, which already has a significant size," a person from Vistara was quoted in the media outlet.
Even though the merger might happen any day now, the newly-merged airlines will take at least another year to commence commercial operations under one umbrella. However, experts believe that this merger will put Air India in a position of power by giving it more bargaining power while dealing with OEMs in the future.