Singapore approves Air India Vistara merger with conditions

The Competition and Consumer Commission of Singapore (CCCS) granted conditional approval for the merger between Air India and Vistara, over a year after the merger was first announced. The deal, revealed in November 2022, includes Singapore Airlines purchasing a 25.1% share in Air India.

Vistara, a collaboration between Singapore Airlines and Tata Group, is preparing to combine with Air India as part of an agreement. The CCCS recently gave its conditional approval following assurances from Air India, Singapore Airlines, and Vistara to resolve any potential issues related to competition.

The merger of Vistara and Air India by Tata Sons and Singapore Airlines (SIA) will create India’s second-largest airline. SIA will invest Rs 2,058.50 crore to acquire a 25.1% stake in the company, with Tata retaining the rest. This move is part of Tata Sons’ efforts to enhance the conglomerate’s operations by simplifying and boosting efficiency.

Approval on key routes of Vistara and Air India

The agreed-upon commitments specifically pertain to scheduled air passenger services on important routes like Singapore-Mumbai (SIN-BOM), Singapore-Delhi (SIN-DEL), Singapore-Chennai (SIN-MAA), and Singapore-Tiruchirappalli (SIN-TRZ). The parties have committed to keeping capacity on these routes at levels seen before the pandemic (in the year 2019), as stated in a statement by CCCS. Additionally, a representative from Singapore Airlines expressed satisfaction with the approval and mentioned that the planned merger is moving forward, pending foreign direct investment and other regulatory clearances.

The merger

The merger’s approval depends on obtaining different regulatory approvals and foreign direct investment clearances, indicating the need for additional authorization before completing the deal.

The antitrust regulator in Singapore has given the green light for the merger of Air India and Vistara, a significant move towards establishing India’s second-largest airline.

The merger of Vistara and Air India by Tata Sons and Singapore Airlines (SIA) will create India’s second-largest airline. SIA will invest Rs 2,058.50 crore to acquire a 25.1% stake in the company, with Tata retaining the rest. This move is part of Tata Sons’ efforts to enhance the conglomerate’s operations by simplifying and boosting efficiency.

The Tata group is expected to start combining commercial operations, such as network synergies, around mid-2024, once they receive regulatory approvals from various agencies like the National Company Law Tribunal, the Ministry of Civil Aviation, and the Department for Promotion of Industry and Internal Trade. Vistara CEO Vinod Kannan previously mentioned that the Tata group aims to finalize the merger by 2025, noting that merging networks and operations will be a complex process that will require time.

The Competition and Consumer Commission of Singapore (CCCS) has approved the merger after reviewing the proposed commitments to address competition concerns. The Competition Commission of India (CCI) also gave the green light to the merger of Vistara and Air India in September last year, based on assurances from both airlines to maintain their current capacity on specific routes.

Competiton

The CCCS had raised competition issues regarding a merger involving Singapore Airlines, Air India, and Vistara, who collectively dominate four direct flight routes between Singapore and India. These concerns led to the airlines making commitments related to capacity to address the CCCS’s worries, with the merger approval hinging on these commitments. Despite other airlines operating on these routes, the parties have maintained a significant market share, leading to potential price and capacity coordination issues that could limit competition, as stated by Singapore’s competition authority.

The CCCS conducted market testing to determine if the proposed commitments would effectively mitigate the competition implications of the merger. The acquisition of Air India by the Tata Group raised concerns during the initial review due to potential competition reduction on the India-Singapore air routes . To address these concerns , the CCCS requested the Tata Group to provide .