Tata Sons start process to bring all its airlines under one roof: Report

Tata Sons has begun the process of merging all its airline businesses -- Vistara, AirAsia India and Air India Express -- under one entity of Air India, according to a report in The Economic Times. The consolidation will increase Air India's fleet to 233 aircraft – the second-largest in the country -- and cut down operational costs.

Tata Sons, the holding company of the Tata group, is in discussion with Singapore Airlines (SIA), its joint venture partner in Vistara, for the merger, the report said, citing executives who know about the matter, adding that the Vistara brand may be dropped after the merger, which will take one year to complete.

The report said that SIA would be a minority shareholder in Air India with 20-25 per cent, and a few board members of Vistara will be included on the Air India board.

An official announcement in this regard is expected within a week.

The expected merger is set to happen within a month of the Tata group completing the consolidation of Air India Express and AirAsia India.

The report said that the contours of the merger have been finalised by Tata group and Air India Chairman N Chandrasekaran and the SIA and Air Asia top brass.

Tata Sons holds the majority 51 per cent stake in full-service airline Vistara.

One of the executives told the publication that SIA agreed to become part of the merged entity because India is a key market for the carrier. "SIA has reaped benefits from Vistara and realises that the cost of scaling up Vistara will be significantly higher as compared to Air India, which already has a significant size," said the person.

In January this year, Tata group regained control of Air India after emerging as the winning bidder for the loss-making airline. It had offered a bid of Rs 18,000 crore, which comprised a cash payment of Rs 2,700 crore and absorbing the carrier's debt worth Rs 15,300 crore.