Singapore Approves Air India-Vistara Merger But With Conditions

Air India and Vistara’s merger cleared a major roadblock after receiving approval from Singapore’s competition watchdog. The two airlines plan to unite their businesses sometime next year, and the latest development is a significant step in that direction.

Approval granted

Singapore’s regulator, the Competition and Consumer Commission of Singapore (CCCS), has agreed to the merger of Air India and Vistara. While the Tata Group fully owns Air India, Vistara is a joint venture between the Tatas (51%) and Singapore Airlines (49%).

Once the two airlines merge, the Tata Group will have a 74.9% stake in the airline, and Singapore Airlines will have a 25.1% stake. The Competition Commission of India (CCI) had already given its approval last year, and now, Singapore’s CCCS has also green-lighted the deal, but with some conditions.

Conditional approval

Air India, Vistara, and Singapore Airlines together command a significant chunk of the India-Singapore sector. As such, the CCCS had some concerns about the implications of the merger for this market.

The regulatory body had observed that the three airlines hold the majority of the market share among airlines operating direct flights on four routes — between Singapore and New Delhi, Mumbai, Chennai, and Tiruchirapalli. The CCCS said in a statement,

“Even though a number of competing airlines provide air passenger transport services on these routes, the parties have sustained substantial market share in recent years. CCCS also found that the price and capacity coordination between the parties arising from the confluence of the Transactions would significantly restrict competition on the affected routes.”

Photo: WeChitra | Shutterstock

To alleviate any fear of reduced competition, the entities have proposed maintaining capacity on the above-mentioned routes at pre-COVID levels. They will also appoint independent auditors to see if compliance with capacity commitments is met.

The CCCS has also said, “Each of the parties (will have) to submit an interim report which monitors their respective compliance with the committed capacity levels for every three weeks of non-fulfilment in a report year.”

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According to The Indian Express, the CCCS observed the market carefully in the last few months to see if the proposed commitments “would sufficiently address the competition concerns.” While most stakeholders were okay with the commitments, one of them raised a concern about refining them. Currently, the CCCS thinks that the commitments are sufficient to address anti-competition concerns.

Long process

Conversations regarding Air India’s merger with Vistara started soon after the acquisition of Air India by the Tata Group in 2021. Once officially declared, the two airlines have been working hard to get all the necessary approvals and lay the groundwork for bringing the two entities together.

Photo: Sundry Photography | Shutterstock

Vistara’s brand will cease to exist after the merger. Still, the Tata Group and Vistara have maintained that the airline will continue to live in many ways in the merged entity in its working culture and operational procedures.

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