On Friday, the Indian Competition Commission approved the proposed merger of Air India and Tata Group airline Vistara, subject to a few conditions. Singapore Airlines was also permitted to purchase shares in the newly formed entity. The approval is contingent on compliance with voluntary commitments made by all parties involved. With this approval, Air India can potentially become the country's largest international carrier and second-largest domestic airline after IndiGo.

"CCI approves the merger of Tata SIA Airlines into Air India, and acquisition of certain shareholding by Singapore Airlines (SIA) in Air India subject to compliance of voluntary commitments offered by the parties," the anti-trust agency posted on X, formerly Twitter. It also added that the details will follow.

In April of this year, CCI was asked to approve the planned combination. The parties to the combination are Tata Sons Pvt Ltd (TSPL), Air India Ltd, Tata SIA Airlines Ltd (TSAL), and Singapore Airlines Ltd.

CCI had been scrutinizing the deal and had flagged concerns that the merged entity could have a monopoly in the domestic market. The CCI said its initial review showed the market share of the Tata group could be more than 50% in at least seven domestic markets, raising competition concerns.

Vistara, a 51:49 joint venture between Tata Sons and Singapore Airlines, is a full-service carrier established in 2013 with international operations in the Middle East, Asia, and Europe. 

As part of the merger of Vistara with Air India, Singapore Airlines was expected to invest Rs 2,059 crore in Air India and hold a 25.1% stake.

Through this deal, SIA will strengthen its relationship with Tata and gain an instant strategic position in a company that is four to five times bigger than Vistara in terms of size.

The transaction is anticipated to boost SIA's position in India, support its multi-hub strategy, and enable it to continue directly competing in a sizable and quickly expanding aviation market.

The combined market share of AirAsia India, Vistara, and Air India was 25.8% in July, according to the data from the Directorate General of Civil Aviation. IndiGo had a market share of 63.4% in the same period.

Image source: Twitter