Wednesday, June 28, 2023

Air India-Vistara Merger Draws Scrutiny Over Competition Concerns

Antitrust regulator Competition Commission of India (CCI) is scrutinizing Tata Group-owned Air India’s planned merger with Vistara over concerns about competition in the aviation sector. The watchdog has issued a show-cause notice to Air India to explain its position and asked the company for clarification on why the merger should not be investigated.

Should the responses provided by the parties fail to satisfy the regulator, the process moves to the second stage. In this phase, the parties are required to make the details of the proposed deal public, and comments from stakeholders are invited. Additionally, the CCI can request further information from the parties involved before reaching a final decision on the merger.

The regulator has flagged that on some routes and categories, such as business class travel, the merged entity could have a monopoly. The CCI note comes amid growing concerns within the industry about a duopoly, with a merged Air India-Vistara and budget carrier IndiGo controlling more than 80% of the domestic market as smaller rivals such as SpiceJet and Go First struggle. 

In November last year, Tata Group announced the merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1% stake in Air India. The merger is expected to be completed by March 2024. 

28/06/2023 Amrita Ghosh/Skift

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