Vistara prepares to merge staff into Air India as two carriers merge

Vistara, now co-owned by Tata Group and Singapore Airlines Ltd., will be folded into Air India under a deal announced in November, giving the Tatas more heft to go up against dominant IndiGo

By Advait Palepu and Ragini Saxena

India’s Vistara airline has begun making plans to merge its staff into Air India Ltd., as the country’s industrial Tata family combines the two carriers to rebuild its aviation empire and take on market leader IndiGo. 
 

“The process of integration of the staff has started,” Vistara Chief Executive Officer Vinod Kannan told reporters in Mumbai on Monday. He expects regulatory clearances to be completed by April 2024, confirming an earlier report that Indian regulators have raised antitrust concerns.

Vistara, now co-owned by Tata Group and Singapore Airlines Ltd., will be folded into Air India under a deal announced in November, giving the Tatas more heft to go up against dominant budget carrier IndiGo. Singapore Air will receive a 25.1% stake in the combined entity in exchange for its interest in Vistara and a $250 million investment.   

The Tatas founded Air India’s predecessor in the 1930s and took over the national flag-carrier again in 2022 after decades of decline. Since then, the country’s biggest industrial conglomerate has been rebuilding the company, making record plane orders alongside IndiGo. 

Vistara and its shareholders have put together a team to discuss what should be the “end structure” of the integrated organization, Kannan said, declining to offer details due to restrictions in India’s competition law. The airline is talking to pilots and cabin crew about the process of the merger and applying to competition authorities in Singapore. 

India’s antitrust regulator has given out show-cause notices raising concerns about the merger, Kannan said. He contends that IndiGo’s control of 63% of the domestic market is a bigger issue than a potential duopoly emerging from the consolidation. Air India currently has 9.7% of the market and Vistara has 8%. 

The combined airline will be named after Air India, while Vistara brand will be scrapped, CEO Campbell Wilson has said. 

Vistara, which will have a fleet of 70 aircraft by the time merger is completed, plans to increase services to Europe over the next year and is looking to start flights to Bali. The airline operates a fleet of 61 aircraft, including Airbus SE A320neo narrowbodies and four larger Boeing Co. 787-9 Dreamliners.