The much-anticipated merger of Vistara into Air India is set to move forward with the final approval for foreign direct investment (FDI) from Singapore Airlines (SIA) expected as soon as Saturday. This approval will allow SIA, which held a 49 per cent stake in Vistara, to acquire a 25.1 per cent stake in the merged airline by investing INR 2,059 crore. The Tata Group will hold the remaining 74.9 per cent stake in Air India.
According to a TOI report, all necessary approvals from regulatory bodies, including the Competition Commission of India (CCI) and the Directorate General of Civil Aviation (DGCA), are already in place. Following the government’s FDI clearance, the merged entity is expected to announce timelines for the merger to passengers, particularly for those who have booked tickets on Vistara flights after the merger date. These passengers will be informed about the new Air India flight numbers and timings.
Sources told TOI’s Saurabh Sinha that the merger is likely to take place after Diwali, around November 1, to avoid potential disruptions during the peak festive travel season. The period between post-Diwali and the onset of winter fog, which typically begins around December 20, is considered an ideal window for the merger. This timing would allow the airline to address any initial merger-related issues before the complexities of winter weather add further challenges.
Vistara’s fleet of 70 aircraft will continue to operate under its current livery until they undergo heavy maintenance checks, at which point they will be repainted in Air India’s new livery. Sources suggest that grounding aircraft solely for repainting is not practical, especially since Vistara’s aircraft offer a superior cabin product compared to Air India’s older planes.
Indian domestic aviation faced a slowdown in growth due to high airfares, despite a 7.3 per cent increase in passengers last month. IndiGo’s market share peaked at 62 per cent, while Air India and its group combined held 28.5 per cent. SpiceJet’s punctuality plummeted, with only 29.3 per cent of flights on time. DGCA data shows the on time performance chart for domestic flights saw Air India Express at the top (70.3 per cent) followed by Vistara (64.6 per cent); Akasa (64.2 per cent); IndiGo (62 per cent) and Air India (57.4 per cent).
The merger process has already seen some key developments, including the transfer of Vistara’s frequent flyer miles to Air India’s loyalty program and the relocation of several Vistara employees to Air India’s new headquarters in Gurgaon. Concerns had been raised about the potential downgrade of Vistara passengers, such as those booked in business or premium economy classes, being shifted to economy on Air India flights due to limited availability in those classes. However, sources have assured that such occurrences will be rare.Initially, Air India’s management had considered delaying the merger until its fleet was upgraded, retaining Vistara as a premium product carrier in the meantime. However, this plan was abandoned amid growing concerns from Vistara employees about key positions in the merged airline being filled by Air India officials. As a result, the merger is now set to proceed before the end of this year, even as Air India’s broader transformation remains a work in progress.
