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NEW DELHI: The Indian Govt has approved foreign direct investment (FDI) by Singapore Airlines into Air India, paving the way for the merger of Vistara into AI by the end of this calendar year.
In a statement, SIA — which owned 49% in Vistara and will own get 25.1% stake in the merged AI by investing Rs 2,059 crore in it, said on Friday: “SIA confirms the Indian Govt has approved its proposed FDI into the enlarged Air India Group, as part of the ongoing merger of Air India and Vistara.This approval, along with other governmental and regulatory approvals received to-date, marks a significant development towards the completion of the merger.”
“SIA and its partner Tata Sons aim to finalise the merger by the end of 2024. Upon completion, SIA will hold a 25.1% stake in the enlarged Air India Group. SIA and Tata Sons are firmly committed to supporting the growth and success of the Air India Group, which post-merger will have a significant presence in all key Indian airline market segments (full service, low-cost, international, and domestic). This merger will reinforce SIA’s multi-hub strategy, and underscore its long-standing commitment to India through a direct stake in this large and rapidly growing aviation market,” the statement added.
Only FDI approval was remaining for the merger as all other nods from agencies like the Competition Commission and DGCA are already in place. Tatas will have remaining 74.9% stake in AI.
After Govt FDI nod, AI-Vistara will shortly communicate timelines of the merger to passengers. People who have booked tickets on Vistara flights post the date of merger will be informed that their flight will be on Air India along with the changed flight number of AI and its time.
Sources say the date of merger is likely to be after Diwali (Nov 1) as the airline will avoid taking any chances during the peak festive travel season. “There will be a decent window between post Diwali and the onset of fog that usually happens after Dec 20 which leads to flight disruptions. Ideally the merger should happen in that space to sort out any merger teething issues like informing passengers booked on Vistara their changed AI flight details before fog adds further complexity to the equation,” said sources.
Vistara has 70 aircraft which will continue to fly in the airline’s livery. The same will changed to AI’s new livery when the aircraft go in for heavy checks. “Taking out aircraft just for painting purpose and letting capacity take a hit makes no sense. Also Vistara aircraft have a better cabin product than that of AI’s old planes,” said sources.
Vistara had earlier reached out to passengers informing them about the transfer of frequent flyer miles to AI’s loyalty programme. The movement of personnel has already started, with many Vistara employees now operating from AI’s new Gurgaon headquarters.
Are there chances that passengers who have booked on a certain class of Vistara, say business or premium economy, on a flight that has to operate after the date of merger being shifted to economy on the AI flight they take as the latter’s business may be full or it may not have a premium economy? “There are little chances of such things happening,” said sources.
AI management had last considered toyed with the idea of postponing Vistara’s merger. The reason: They wanted AI planes to be upgraded first and till then retain Vistara as the better product carrier. However given mounting concerns among Vistara employees about AI officials getting all key posts in the merged airline, that plan was shelved. So even as AI remains very much a work in slow progress, the merger is now going to happen before the end of this calendar year.
In a statement, SIA — which owned 49% in Vistara and will own get 25.1% stake in the merged AI by investing Rs 2,059 crore in it, said on Friday: “SIA confirms the Indian Govt has approved its proposed FDI into the enlarged Air India Group, as part of the ongoing merger of Air India and Vistara.This approval, along with other governmental and regulatory approvals received to-date, marks a significant development towards the completion of the merger.”
“SIA and its partner Tata Sons aim to finalise the merger by the end of 2024. Upon completion, SIA will hold a 25.1% stake in the enlarged Air India Group. SIA and Tata Sons are firmly committed to supporting the growth and success of the Air India Group, which post-merger will have a significant presence in all key Indian airline market segments (full service, low-cost, international, and domestic). This merger will reinforce SIA’s multi-hub strategy, and underscore its long-standing commitment to India through a direct stake in this large and rapidly growing aviation market,” the statement added.
Only FDI approval was remaining for the merger as all other nods from agencies like the Competition Commission and DGCA are already in place. Tatas will have remaining 74.9% stake in AI.
After Govt FDI nod, AI-Vistara will shortly communicate timelines of the merger to passengers. People who have booked tickets on Vistara flights post the date of merger will be informed that their flight will be on Air India along with the changed flight number of AI and its time.
Sources say the date of merger is likely to be after Diwali (Nov 1) as the airline will avoid taking any chances during the peak festive travel season. “There will be a decent window between post Diwali and the onset of fog that usually happens after Dec 20 which leads to flight disruptions. Ideally the merger should happen in that space to sort out any merger teething issues like informing passengers booked on Vistara their changed AI flight details before fog adds further complexity to the equation,” said sources.
Vistara has 70 aircraft which will continue to fly in the airline’s livery. The same will changed to AI’s new livery when the aircraft go in for heavy checks. “Taking out aircraft just for painting purpose and letting capacity take a hit makes no sense. Also Vistara aircraft have a better cabin product than that of AI’s old planes,” said sources.
Vistara had earlier reached out to passengers informing them about the transfer of frequent flyer miles to AI’s loyalty programme. The movement of personnel has already started, with many Vistara employees now operating from AI’s new Gurgaon headquarters.
Are there chances that passengers who have booked on a certain class of Vistara, say business or premium economy, on a flight that has to operate after the date of merger being shifted to economy on the AI flight they take as the latter’s business may be full or it may not have a premium economy? “There are little chances of such things happening,” said sources.
AI management had last considered toyed with the idea of postponing Vistara’s merger. The reason: They wanted AI planes to be upgraded first and till then retain Vistara as the better product carrier. However given mounting concerns among Vistara employees about AI officials getting all key posts in the merged airline, that plan was shelved. So even as AI remains very much a work in slow progress, the merger is now going to happen before the end of this calendar year.