According to insiders, the combined entity will face competition from rivals on most routes they operate. The CCI’s examination of the merger is not expected to impact the business significantly, but it might affect the timeline.
Regulator Reviews Air India Vistara Merger
The CCI is currently reviewing the merger of Air India and Vistara as part of the Tata Group’s airline consolidation plan.
Although the process has moved to phase 2, the CCI has not expedited permission and requested both airlines explain why an investigation into the merger’s impact is unnecessary. Air India has yet to respond to the queries.
A person involved in the process stated that antitrust regulators worldwide analyze competition impact using an origin and destination (O&D) approach to identify relevant markets.
The combined entity of Air India, Air India Express, and Vistara is expected to face enough competition on most busy routes. Subsequently, restraining market power.
The Tata Group intends to merge Vistara with Air India, creating a single full-service airline. Singapore Airlines will hold a 25.1% share in the new entity.
Meanwhile, AirAsia India is in the process of merging with Air India Express to establish a single low-cost subsidiary AIX Connect. These mergers aim to streamline operations and improve efficiencies.
Data analytics firm Cirium reveals that the merged entity will have a 49% share of total flights on the Delhi-Mumbai route. IndiGo, a key competitor, holds a 31% share.
Similarly, on the Delhi-Bengaluru route, the Air India group will have a 52% share of total flights, while IndiGo (6E) has a 35% share.
In terms of international routes, the Air India group will enjoy a significant advantage, with 23% of total flights on the Delhi-Dubai route. Other strong competitors include Emirates (EK), IndiGo (6E), and SpiceJet (SG).
No Business Cost Difference
The Air India group has assured the commission that there is no significant cost difference between full-service and low-cost airlines in India.
They operate from the same airports and face similar expenses such as fuel, landing charges, and parking fees. Post-merger, Air India will be the sole full-service airline operating within India.
An insider mentioned that the thorough examination by the CCI is seen as a positive step. Such a large-scale merger is bound to attract attention, and ensuring a comprehensive check will help avoid any questions or concerns once the process is completed.
The Air India Vistara merger is being closely monitored as it progresses through the regulatory review process. Both companies remain optimistic about the outcome and are confident that the merger will not adversely affect competition in the airline industry.
Airlines Mergers in India
This is not the first time that airlines are merging in India. Earlier, many airlines merged, and today, some no longer exist in Indian skies. So let’s see such airlines and what went wrong.
1) Air India and Indian Airlines Merged to form Air India in 2007. However, since then, the decline in airlines has actually started. The airline operating losses increased each year. Ultimatley, the Indian govt sold the carrier to Tata Group, the original founder of the carrier.
2) Jet Airways and Air Sahara merged in 2007. Jet Airways rebranded Air Sahara as Jetlite later merged it again, and formed JetConnect. However, nothing worked for them, and they ceased operations on 17 April 2019.
3) Kingfisher and Air Deccan Merger in 2008. Kingfisher rebranded it as Kingfisher Red. Unfortunately, the fate remained the same, and the airline ceased its operations on 20 October 2012.
There are some other mergers as well. We will make a detailed article on airline mergers in India and how it has changed the economics of the Indian aviation industry.
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