Buzz of merger with Vistara as AI charts out plan to be world-class

NEW DELHI: Amid the ambitious plan of the Tata-owned Air India to raise its market share substantially to at least 30 per cent in the domestic market, there is a buzz within the aviation industry on the possibility of its merger with Vistara, a joint venture between Tata Sons and Singapore Airlines.

On September 15, Air India unveiled its comprehensive transformation plan, to establish itself, once again, as a world-class global airline. It said over the next five years, it will strive to increase its market share to at least 30 per cent in the domestic market while significantly growing the international routes from the present market share. The plan is aimed at putting Air India on a path to sustained growth, profitability and market leadership.

Air India clocked a market share of 8.5 per cent in August while carrying 8.61 lakh passengers. On the other hand, Vistara has maintained its second position in terms of the market share during the last two months July (10.4 per cent) and August (9.7 per cent).

Apart from this, Air India has talked about its fleet expansion plan by introducing five widebody and 25 narrowbody aircraft. The airline has also said about getting back its grounded aircraft in service.

On the other side, Vistara has 55 aircraft and the number will increase to 60 in the upcoming months. In the winter schedule starting from October end, Vistara will add more flights to Europe as it has planned increasing capacity to Frankfurt and Paris.

When asked about the possibility of a merger, an industry insider said there was speculation about the merger particularly after Air India’s announcement of the transformation plan. There will be clarity on this only in the coming months. The ambitions of Air India to have 30 per cent market share from the current existing market share of 8.5 per cent gives enough support to the buzz of a merger with Vistara,” he said.

When contacted, both the airlines refused to comment on the possibility of merger.

Moreover, the Competition Commission of India approved Air India’s proposed acquisition of Tata group’s entire 83.67 per cent stake in Air Asia India. The approval gives a boost to the group’s plans of merging the two airlines.

Currently, the Tata Group operates four airlines - Air India, Air India Express (international), AirAsia India (domestic) and Vistara. Air India and Vistara operate on domestic and international routes. Air India and AirAsia have a combined market share of 13 per cent in India. The group already planned to merge AirAsia India with Air India Express.