The Tata Group has started the process of consolidating its entire airline business under Air India with the aim to wrap up the consolidation process by 2024.
The merger of Vistara and Air India will be a multiple-step process and will be subject to various regulatory approvals.
AirAsia India and Air India Express merger
Air India will first complete the merger of AirAsia India with Air India Express by the end of 2023.
Air India earlier this month announced that it has signed agreements to complete the acquisition of 100 percent shareholding in AirAsia India.
AirAsia Aviation Group expects to receive Rs 1.56 billion from the stake sale.
The new combined entity Air India Express is aimed at having a single low-cost carrier for the Air India group.
Air India has created a working group to evaluate and execute the integration of the Air India group’s low-cost operations, which will be co-led by AirAsia India MD and CEO Sunil Bhaskaran and Air India Express CEO Aloke Singh.
Officials from Air India said that as part of the merger Air India Express will acquire all 28 of Air Asia India's Airbus A320-200 and Airbus A320 neo planes along with pilots and cabin crew.
Following this, the process of merging Air India and Vistara will take place.
Vistara and Air India merger
Once the merger of AirAsia India and Air India Express is completed, Air India will approach the Competition Commission of India for the proposed amalgamation of Vistara and Air India.
Following CCI approval Air India will approach the Directorate General of Civil Aviation.
As part of the merger, Vistara will continue its fleet and expansion plans that it had charted out, Vinod Kannan, Vistara CEO said in an email to his employees today.
Kannan added that Vistara still plans to go ahead with its plans to expand its 54-aircraft fleet to 70 by end of 2023.
Before the merger can be completed Air India will have to come up with a comprehensive plan surrounding its domestic and international routes, the combination of the workforces of the two airlines, usage of domestic and international slots, and market share in the domestic and international markets.
Air India will also have to come up with a plan to integrate the maintenance contracts of both airlines.
Regulatory Approvals
An airline merger combines all aspects of two airlines’ operations into a new entity under a single air operator's certificate.
Before the DGCA issues a single air operator's certificate, the merged airline must demonstrate that it will operate at the highest levels of safety.
In the context of mergers, according to the domestic air transport policy, the airline which is merging with or acquiring another airline is allowed to take control of the airport infrastructure, including slots of the latter.
If the concerned infrastructure is not used, the airline will lose user rights over the infrastructure including the slots.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
