After multiple failed attempts to sell it off, an ailing Air India with Rs 60,000 crore in debt, went home to its original owner Tata Group earlier this year. Months after that acquisition Tata has plans to lease 25 new aircraft that’ll elevate Air India’s operations and has processed refunds worth Rs 150 crore for passengers. Now India’s first airline will be carried back to the skies, after it is attached to Tata’s high flying carrier Vistara, which was recently named among world’s 20 best airlines.
India’s oldest carrier and Tata’s growing young brand
Along with its partner Singapore Airlines, ranked as the world’s second best after Qatar Airways, Tata is reportedly set to merge Vistara and Air India into one brand. With their individual identities intact despite becoming a joint venture, Vistara and Air India are expected to take on India’s top airline Indigo as a team, according to a Mint report. Currently Vistara is the second biggest domestic carrier after Indigo, but with a market share of almost 10 per cent, it’s still a long way behind Indigo’s 59 per cent.
With the new deal, the two Tata-owned airlines have come a long way from 2018, when they came close to a mid-air collision with hundreds of passengers on board. The disaster was averted when Air India's pilot quickly steered the aircraft away after receiving an instrument warning when the carriers were just 100 feet apart.
Singapore Airlines’ route for expansion in Indian skies
Singapore Airlines, which had launched Vistara as a joint venture with Tata in 2015, will remain a minority stakeholder in the new entity. The Singapore government-owned carrier is expected to keep a 25 per cent stake in both Vistara as well as Air India. It currently controls a 49 per cent stake in Vistara, and itself survived the pandemic on a $13 billion bailout after posting its first loss in 48 years during the crisis. The plan to propel Vistara is part of Singapore Airlines’ strategy for growth in overseas domestic markets, after the pandemic hit international air travel.
The merger may also provide access for Singapore Airlines to new international slots held by Air India, which continued operations to evacuate Indians during the pandemic and emergencies such as the war in Ukraine. The infusion of funds after being bought by Tata Group, which had originally launched Air India in 1932, will ramp up its efficiency further. It has also started hiring staff for expanding its fleet, and Air India’s legacy may dominate the JV although Vistara will stay a brand on its own.