Air India has been given a show-cause notice from the Competition Commission of India (CCI), requesting an explanation as to why the plan to integrate Vistara with it should not be looked into. Within 30 days, the Maharaja of the Tata Group must respond and attempt to allay the concerns of the anti-monopoly authority in order to obtain approval for the union of India’s two full-service (FSC) airlines, AI and Vistara. On this subject, comments from AI have been requested and are awaiting.
Tatas and Singapore Airlines (SIA) had already stated their intention to establish one FSC by March 2024. Vistara’s merger into Air India, according to Tata Sons, AI, Vistara, and SIA, “won’t lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India,” in their joint request for the two FSCs’ merger this April.
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Role of CCI in this issue:
CCI evaluates merger proposals after determining if they will have a negative impact on competition. Only two full-service airlines, AI and Vistara, both part of the Tata Group, are present in India.
Tatas owns 51% of Vistara, and SIA owns 49%. In the proposed combination of Vistara and AI, SIA will own 25.1% of the combined company, with Tatas owning the remaining 75%. As soon as this integration is finished, SIA will invest $250 million, valuing the upcoming super AI at roughly $1 billion. The Southeast Asian airline claims it will use its internal financial resources, which were valued at S$17.5 billion as of September 30, 2022, to cover the entire cost of this expenditure.
Low-cost AirAsia India is also being merged with Air India Express by the Tatas. One airline, or “mega AI,” with an LCC arm is the concept. According to analysts, CCI may have warned about the possibility of a duopoly developing in the aviation industry as a result of Go First’s recent voluntary insolvency filing. With a 4.8% market share, the new airline Akasa has begun flying. Since the aviation industry requires a lot of capital, certain companies may find it difficult to maintain profitable operations in the future. For this reason, any merger plan must be carefully examined for potential effects on the market.
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