Some of the biggest airlines in the world today can trace their history to mergers. Delta Air Lines digested NorthWest within itself, United and Continental merged, and American Airlines swallowed US Airways whole.
But `merger’ is a dreaded word in Indian aviation. The Jet Airways-Air Sahara, and Kingfisher Airlines-Air Deccan mergers resulted in utter confusion and ended on a disastrous note. The challenges of the Indian Airlines-Air India merger continue apace even as Air India has been sold off to the Tatas.
This hasn’t stopped the Tata group from looking at another merger: that of Vistara (a Tata-Singapore Airlines joint venture) with Air India (AI). This comes after another Tata merger that is already in the works, that of AirAsia India with Air India Express.
For the first time, Singapore Airlines (SIA) laid to rest speculations about the merger with a stock market filing that informed about the on-going talks.
The Jet Airways-Jetlite merger was never completed in the true sense. Jetlite continued to be a separate entity with a separate Air Operating Permit (AOP) right till the last day of operations. While Jet Airways passengers saw the 9W code, Jetlite operations continued with the S2 code and its call sign.
Kingfisher Airlines-Air Deccan was a reverse merger, which was done so that Kingfisher could use Air Deccan’s AOP to fly international routes as it did not have the required five years of experience to fly international.
The Tata Group currently holds 100 percent of Air India and 51 percent of Vistara. However, a closer look shows that Talace, the special company formed to bid for Air India, owns Air India, while Vistara is owned by Tata Sons, the group’s parent company.
So how will the Vistara-SIA merger be engineered? Will SIA get stake in Talace, and will Vistara be purchased by Talace? Or will SIA have a stake in Air India? Time will have answers to each of these questions. What’s important is that Tata's aviation business is sitting on a lot of assets, which makes Vistara an interesting partnership for SIA.
Air India and Vistara remain the only two carriers to operate wide body aircraft in India. Between them, they have established routes and slots at busy airports like Singapore, London, New York, and San Francisco. However, these planes cannot be inducted into the fleet quickly. SpiceJet has abandoned its wide-bodied aspirations even as IndiGo plans to induct wet-leased wide body aircraft.
As a government entity, Air India has traditionally benefited the most from the allocation of bilateral rights. Now a private enterprise, it has embarked upon utilising most of those rights by adding planes. Vistara has also been able to make a lot of gains after the demise of Jet Airways.
At many airports across the country, the combined Tata Group offering is bigger than IndiGo, which definitely puts pressure on the latter. Add to that the Tatas’ complimentary meals versus the revised pricing of IndiGo’s in-flight meal options, and people could tend to prefer a Tata carrier.
17/10/22 Ameya Joshi/Moneycontrol
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