Air India has come one step closer to taking over rival airline Vistara in a multi-billion dollar merger that will create India’s largest airline with a combined fleet of more than 200 aircraft after regulators gave the deal its approval.
Last week, India’s National Company Law Tribunal ruled that the merger could advance, giving the airlines nine months to complete the deal. Air India CEO Campbell Wilson says he believes the merger will be complete by the end of 2024.
The merger was first announced in 2022 after Air India was bought by the country’s Tata & Son conglomerate following a drawn-out sales process by the Indian government, which had been desperate to offload the loss-making state-owned carrier.
Tata & Son isn’t a newcomer to the aviation business, having founded Air India in 1932 before it became a government-owned entity. In more recent years, the company created Vistara in 2013 as a joint venture with Singapore Airlines, with the Indian side holding a controlling 51% stake and SIA owning the remaining 49% in Vistara.
It was, therefore, little surprise that Tata & Son announced its intention to merge the two airlines, although plans to discontinue the Vistara brand haven’t been without controversy given the fact that the carrier is generally regarded as a well-run and customer-friendly airline – unlike the much bigger Air India.
Once merged, Tata & Son will retain a 74.9% stake in Air India, while Singapore Airlines will hold in a 25.1% stake in the merged company.
Tata & Son is pumping huge amounts of money into Air India as part of a transformation programme to make the airline competitive on the international stage and compete with rivals like Emirates, British Airways and Qatar Airways.
With a massive fleet renewal underway, Air India is hoping to snatch customers away from competitors by offering non-stop fleets between India and Europe and North America without a transit stop.
Over the coming years, Air India is expected to take delivery of 470 new aircraft after signing historic deals said to be worth as much as $70 billion with Airbus and Boeing. The airline is also investing a further $400 million to retrofit existing aircraft with much-needed new interiors.
No date has yet been announced for when the Vistara brand will finally be retired.
