Tata Sons is likely to offer a stake in Air India Singapore Airlines (SIA) as part of talks to merge their Vistara joint venture with Air India, top executives close to the matter said. SIA, which owns 49% in Vistara’s parent Tata SIA Airlines, has agreed “in principle” to the proposal to bring Air India on board with the Tata Group, they said. Tata Group is looking to merge Vistara with the national carrier it recently acquired and have Air India as a single airline brand under its wing, executives said. Tata Group and Air India chairman N Chandrasekaran and top SIA officials are in talks, they said. Tata Sons holds a majority 51% stake in full-service airline Vistara. Tata Sons did not comment. A Singapore Airlines spokesman said: “We do not comment on any confidential discussions we may or may not have with our partners.” SIA, which is trying to get its global business back on track post-Covid, is unlikely to inject any significant funds into Air India just yet, executives said. The Tata Group has given Singapore Airlines plenty of time to warm to the idea of a single airline entity plan. Air India wants to focus on consolidation and the scale and integration will create the second largest airline in the country after IndiGo. The Tata Group is also merging another airline in its fold, AirAsia India, with Air India Express, Air India’s low-cost brand that flies primarily to destinations in West Asia and Southeast Asia. In June, the Competition Commission of India approved the proposed merger.
Tata Sons chairman Chandrasekaran has been consistent in saying that the group’s airlines, which operate on low margins, must be consolidated to ensure operational efficiency and maintain cost control. “It makes immediate sense to consolidate similar businesses under the same brand,” said Vihang Virkar, partner at Lumiere Law Partners. “The consolidation of the three airlines – AirAsia, Vistara and Air India – would not only bring operational efficiency to the Tatas, but they would also be able to benefit from better bargaining power in their dealings with OEMs such as aircraft and engine manufacturers.” Air India is clearly the more dominant brand between the three, which has a tradition of more than 75 years, he said. “Air India, which has been the national carrier for several decades, also enjoys excellent value for passengers in India and overseas. Since Vistara and AirAsia have recently started international operations, using the ‘Air India’ brand would certainly benefit them,” he added.