Tata Group in talks with Singapore Airlines to merge Vistara, Air India: Report

The Tata Group and Singapore Airlines Ltd are reportedly holding talks to merge the businesses of Air India and Vistara Airlines. According to an article published in LiveMint, the joint venture is being discussed with an aim to optimise resources and compete together against the country’s top airline, IndiGo.The report quoted two individuals who spoke on conditions of anonymity that Singapore Airlines may maintain a minority stake of up to 25% to the tune of ₹5,000 to ₹10,000 crore as part of the merger.Air India was reacquired by the Tata group last year in one of the most-discussed takeovers of the decade.“SIA (Singapore Airlines) is Tata Sons’ current JV partner in Vistara. Talks are going on between the two JV partners on how best to leverage the future India opportunity in aviation. What corporate structure will emerge is still under discussion,” one of the two persons was quoted as saying.The merger, which could take a year to complete, is a part of a bigger consolidation drive by Tata Sons to save costs, create synergies by optimising aircraft utilisation and routes, and increase market share to compete with IndiGo, India’s largest airline with a market share of 59%.“According to a recent internal exercise, the combined valuation of Air India and Vistara could be at least ₹30,000 crore,” one of the individuals said.However, representatives for Vistara and Tata Sons have declined to comment on the merger. A Singapore Airlines spokesperson said, “We do not comment on any confidential discussions that we may or may not be having with our partners.”In addition to offering economies of scale to both Vistara and Air India, a merger may give Singapore Airlines access to dozens of new slots globally and aid Tata Sons in the consolidation of its aviation business balance sheets.After the merger, Air India and Vistara are anticipated to maintain their own brand identities, though ultimately only one brand may endure.