No Merger For Now, Air India And Vistara Will Coexist Under Tata Group
Ever since the Tata Group showed interest in buying Air India, many had asked the same question - what will be the future of the airline under the new management that already operates two carriers.
Before the acquisition of Air India, Tata Group had been operating budget carrier Air Asia India and Vistara, a full-service airline in partnership with Singapore Airlines.
Now with Air India and its budget carrier Air India Express, the Tata Group operates four identical services competing against each other for the same group of passengers.
This, many have pointed out that is not sustainable for the Tata Group, especially due to the razor-thin margins under which full-service airlines operate.
Adding to this is the fact that both Air Asia India and Vistara are not making much money and are operating under losses.
Given the circumstances, there have been speculations that Tata will eventually merge all the carriers under one unified entity.
If that happens, it will create the biggest airline in terms of both fleet and passengers.
However, this doesn't seem to be the case, at least in the near future.
Bhaskar Bhat, chairman of Tata SIA Airlines has said that there are no talks of a merger as of now.
"Vistara will continue to focus on good customer experiences and to say anything beyond that will be speculation. Should Air India and Vistara merge is not an answer I can give. Merger is a strategic subject and best resolved between JV partners," Bhat told The Economic Times.
"We have to run Vistara efficiently and coexist with Air India like any other airline," Bhat added.
SIA had kept itself away from Air India from the start and had turned down a proposal by the Tata Group to jointly acquire the airline.
On the other hand, a merger between Air India Express and Air Asia India is looking more likely.
Tata Group owns 84% stake in AirAsia India and given its own international troubles, AirAsia is not in a position to invest more in the budget carrier.
It was even eyeing to exit India, leaving the business entirely to Tata. In December 2020 AirAsia had announced the disposal of a 32.67% stake to Tata Sons for $37.7 million, with a provision to sell the remaining 16.33% for $18.8 million.
In November 2021, it was reported that Tata has commenced work on the merger of AirAsia India with Air India Express.
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