Air India-Vistara Merger: No adverse impact on competition, Tata group tells CCI

Air India, which Tata Group took over last year, wants to modernise its fleet, operational systems and revenue management.

Tata Sons-run domestic airlines Air India and Vistara have conveyed to the antitrust regulator Competition Commission of India (CCI) that a proposed merger of the two will not impact competition adversely as rivals are present on most routes that the combined entity will fly, according to a report.

The CCI’s decision to review the Air India and Vistara merger will not have any material business impact, although it could delay the process, sources told The Economic Times.

Moneycontrol couldn't verify the report independently.

Earlier, CCI had issued notice to the two airlines seeking reason on why a probe of the impact of the merger should not be initiated. According to competition law, the antitrust body has the power to do a thorough investigation before giving the green light for a merger or acquisition (M&A) in case there are concerns about possible anti-competitive practices about the deal.

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If the deal sees the light of day, it will make Air India the country's largest international carrier and second-largest domestic airline. Air India, which Tata Group took over last year, wants to modernise its fleet, operational systems and revenue management.

“Anti-trust regulators around the world examine the impact on competition through an origin and destination (O&D) approach to identify relevant market… if we take a look at most busy markets, the combined entity of Air India, Air India Express and Vistara will have enough competition to restrain market power,” ET quoted a source say.

The combined Air India group will have 49 percent of the total flights on the Delhi-Mumbai route. IndiGo, India's largest airline by market share, also has a strong presence on the route with 31 percent of total flights. Likewise, on the Delhi-Bengaluru, the second busiest route, the Air India group will have 52 percent share of total flights. IndiGo has a 35 percent share, the report pointed out citing aviation analytics firm Cirium data.

Also Read | Vistara merger to help Air India achieve 30% domestic market share faster

The Air India group has told the CCI that the cost difference between a full-service and low-fare carrier is low as they operate from common airports and bear the similar costs such as fuel, landing and parking charges.

A detailed scrutiny by the CCI will ensure that the process will not meet any challenge after the deal completion, the source told the publication.