SINGAPORE- The Competition and Consumer Commission of Singapore (CCCS) granted conditional approval on Tuesday to the proposed merger between Air India (AI) and Vistara (UK), a joint venture between Tata (with a 51% stake) and Singapore Airlines (holding a 49% stake).
The Competition Commission of India (CCI) had previously approved the merger in September, and the CCCS’s approval was one of the final competition-related clearances needed for the merger.
Air India Vistara Merger Singapore CCCS Approval
The CCCS had identified certain competition concerns related to the merger, particularly the combined majority market share held by Singapore Airlines (SQ), Air India, and Vistara on four direct flight routes between Singapore and India (Delhi, Mumbai, Chennai, and Tiruchirapalli).
In response to these concerns, the airlines have made commitments related to capacity, and the approval is contingent upon fulfilling these commitments.
Despite the presence of several competing airlines offering air passenger transport services on these routes, the involved parties have maintained significant market share in recent years.
The Competition and Consumer Commission of Singapore (CCCS) highlighted in a statement that the confluence of the transactions has led to observed price and capacity coordination between the parties, resulting in a substantial restriction of competition on the affected routes.
As part of the commitments made by the airlines, they will ensure that the deployed capacity on these four routes remains at 2019 levels. Additionally, an independent auditor will be appointed to oversee compliance with the capacity commitment, submitting a written annual report for each year.
The CCCS specified that each party must submit interim reports monitoring their respective compliance with the committed capacity levels every three weeks in a report year in case of non-fulfilment.
No Objection from Stakeholders
Between December 8 and February 1, the Competition and Consumer Commission of Singapore (CCCS) conducted a market testing exercise to assess whether the proposed commitments adequately addressed the competition concerns.
The regulator reported that most relevant stakeholders did not express any concerns regarding the commitments, with only one providing suggestions for refining them.
“After careful evaluation of the feedback received, the CCCS has determined that the proposed commitments are satisfactory in addressing the competition concerns arising from the transactions,” stated the competition watchdog.
Bringing Everything Under Tata
The merger between Air India and Vistara forms part of the ongoing consolidation of airlines within the Tata umbrella. Currently, the Tata Group is in the process of merging its low-cost carriers, Air India Express (IX) and AIX Connect (formerly Air Asia India).
After completing both mergers, the Air India group is set to comprise a full-service carrier, Air India, and a low-cost airline, Air India Express.
Anticipated to be finalized in 2025, the merger will result in Singapore Airlines holding a 25.1% stake in the combined Air India.
Although the merged entity is poised to become India’s second-largest carrier in terms of domestic market share, it will still lag significantly behind the market leader, IndiGo (6E).
As of January, Air India and Vistara collectively held a domestic market share of 22.1%, while IndiGo commanded a dominant share of 60.2%.
Vinod Kannan earlier stated to The Indian Express,
“The next pending approval is from the NCLT (National Company Law Tribunal), and we are confident that it should be granted either in the first quarter or the first half of this year. The DPIIT (Department for Promotion of Industry and Internal Trade) requires final approval. We anticipate receiving all necessary approvals by the middle of this year. Once these legal clearances are obtained, the operational merger will commence. If everything proceeds as planned and is subject to further approvals from the Ministry of Civil Aviation and DGCA (Directorate General of Civil Aviation), we estimate the entire process to take approximately 12 months. Therefore, the projected timeline for the merger is around 2025,”
Vinod Kannan, Vistara CEO
Stay tuned with us. Further, follow us on social media for the latest updates.
Join us on Telegram Group for the Latest Aviation Updates. Subsequently, follow us on Google News.
