Singapore Airlines to Stay amid Air India-Vistara Merger

DALLAS — Tata Sons, the owner of Air India (AI), is expected to announce that within a week, Vistara (UK) will merge with AI in the next twelve months.

We can recall that AirAsia (AK) sold its remaining stake in AirAsia India (I5) to Tata-owned AI subsidiary Air India Express (IX). After acquiring AI in January 2022, the Indian multinational conglomerate headquartered in Mumbai owns four carriers in the country: AI and its subsidiary IX, AK, and UK. As a result, there are overlaps and cost inefficiencies.

The merger between UK and AI was therefore a complicated one, as Singapore Airlines (SQ) did not want to participate in the privatization of AI. The Singaporean carrier has a 49% stake in Tata SIA Airlines, which operates UK, while the Indian conglomerate owns the rest.

Now, according to a report in India’s Economic Times, SQ has reached an agreement with AI, lowering the former's stake in UK to 20-25%.

This includes less board representation for SQ in the venture partner UK. Then it is presumed that UK will be merged with AI. The Changi-based carrier is more interested in developing hubs outside of its home airport but has been pleased with its investment in UK.

Since SQ's investment in UK, the carrier has become India’s second-largest domestic carrier within ten years. The merger between the two carriers will take time as they will need to go through many regulatory processes.

Vistara has quietly become the second-biggest domestic airline in the country. Further, the airline serves twelve international destinations from its hubs at Delhi (DEL), Mumbai (BOM), and Pune (PNQ), including London (LHR), Paris (CDG), Dubai (DXB), and Bangkok (BKK), among others.

Comments from Singapore Airlines Officials

At an investor meeting last week, Singapore Airlines CEO Goh Choon Phong stated "There are growth limitations based on the Singapore market. We are mitigating some of that, through all kinds of partnerships'' 

He further added, "Our multi-hub strategy is really to enable us to participate directly in the growth in that particular region or country, in a way that we cannot do so if we are just based in Singapore."

"Singapore Airlines will never be able to operate from India to domestic India, nor to so many international points from India. We also look at it from the perspective of how it can complement the Singapore hub, with synergies between the two countries. That is the reason why we have invested in Vistara."

Vistara has 50 aircraft in its fleet and is expected to have 70 aircraft in its fleet by the end of 2023. The backbone of the airline's international fleet is the Boeing 787-9 Dreamliner for which the carrier operates three examples.

Featured image: Vistara VT-TTN Airbus A320. Photo: Ratchapon Pipitsombat/Airways