Air India, Vistara Assure CCI That Merger Won’t Have Adverse Impact
Written by Sanjay Kumar
|CEO: Campbell Wilson (2022–)
|CEO: Vinod Kannan (1 Jan 2022–)
|Hubs: Indira Gandhi International Airport, MORE
|Alliance: Star Alliance
|Parent organization: Tata Sons
|Founder: J. R. D. Tata
|Founders: Singapore Airlines, Tata Sons
|Revenue: 26,430.59 crores INR (US$3.3 billion, 2019)
|Founded: 5 November 2013, New Delhi
Air India and Vistara have informed the Competition Commission of India (CCI) that their merger will not have a negative impact on competition. They emphasized that they face competition from other airlines on all the routes that the merged entity would operate. This response follows media reports from the previous month, which indicated that the CCI had requested an explanation from Air India regarding the need for an investigation into its merger with Vistara.
While the airlines stated that the CCI’s scrutiny would not significantly affect their operations, they acknowledged that the timeline for the merger could be impacted, according to a report in The Economic Times.
The merger process between Air India and Vistara has now entered the second phase, and further discussions are expected between the parties and the CCI. The CCI has not granted expedited permission for the merger to proceed.
Air India also assured the commission that there is no cost difference between a full-service and a low-cost airline since both operate from common airports and bear the same fuel, landing, and parking charges.
Upon completion of the merger, the new entity is projected to control 49 percent of the total flights on the Delhi-Mumbai route, while IndiGo would hold 31 percent. Additionally, the entity would operate 23 percent of the total flights on the Delhi-Dubai route, where IndiGo, Emirates, and SpiceJet also have a significant presence.
As a subsidiary of the Tata Group, Air India has ambitious plans to modernize its fleet, operational systems, and revenue management. Following the merger, the carrier would become the sole full-service airline operating in India.
In November of the previous year, Tata stated that the Air India-Vistara merger would create a larger airline capable of competing with major players like IndiGo, as well as Middle Eastern carriers that currently dominate outbound traffic from India.
Earlier reports suggested that the CCI expressed concerns that the merged entity could potentially establish a monopoly on certain routes and categories such as business class travel. To ensure competitiveness, Air India might be required to relinquish certain routes or reduce flight frequency.
The CCI’s concerns arise amidst growing industry apprehension regarding the dominance of the Air India-Vistara entity and IndiGo, which control a significant portion of the market, while smaller players such as Go First and SpiceJet struggle to compete.
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