Mr Goh Choon Phong, Chief Executive Officer, of Singapore Airlines, said: “Tata Sons is one of the most established and respected names in India”. SIA intends to fully fund any additional capital injections with its internal cash resources. We are transforming Air India, with the aim of providing a great customer experience, every time, for every customer.

Mr Natarajan Chandrasekaran, Chairman, of Tata Sons, said: “The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline”.

SIA and Tata have also agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India in FY2022/23 and FY2023/24.

This would reinforce its position as India’s largest international carrier and second largest domestic carrier, allow it to offer more options and connectivity for business and leisure customers, and enable it to compete as a leading global airline.

“We are excited about the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes”.

“With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market”. Based on SIA’s 25.1% stake post-completion, its share of any additional capital injection could be up to INR 50,200 million (S$880 million, US$615 million), payable only after the completion of the merger.

With Vistara widely recognised as India’s leading full-service carrier, Air India will benefit from its operational capabilities, customer base, and strong focus on customer service and product excellence.

Air India (including Air India Express and AirAsia India) and Vistara have a total of 218 wide-bodies and narrowbody aircraft, serving 38 international and 52 domestic destinations. The merger would bolster SIA’s presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in a large and fast-growing aviation market.

“We will work together to support Air India’s transformation programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage.” Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time.

Singapore Airlines (SIA) and Tata Sons (Tata) have agreed to merge Air India and Vistara, with SIA also investing INR 20,585 million (S$360 million, US$250 million) in Air India as part of the transaction.

SIA intends to fully fund this investment with its internal cash resources, which stood at S$17.5 billion as of 30 September 20222.

The actual amount will depend on factors including the progress of the enlarged Air India’s business plan, and its access to other funding options.

Through this transaction, SIA will reinforce its partnership with Tata and immediately acquire a strategic stake in an entity that is four to five times larger in scale compared to Vistara.

India is the fastest-growing global economy and is projected to become the third-largest in the world by 20273. It can optimise its route network and resource utilisation, be flexible and agile in capturing demand across market segments and tap into a larger consumer base to strengthen its loyalty programme.

This would give SIA a 25.1% stake in an enlarged Air India group with a significant presence in all key market segments1. As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, and enhancing safety, reliability, and on-time performance. Following its acquisition by Tata in January 2022, Air India unveiled a wide-ranging transformation programme to strengthen its foundations and revamp its operations, setting it on the road to recovery and positioning it for growth.

With the integration, Air India will be the only Indian airline group to operate both full-service and low-cost passenger services. Demand for air travel is surging with passenger traffic expected to more than double over the next 10 years, supported by rising income levels and ongoing investments in its aviation infrastructure.

The combination of Air India and Vistara would bring significant synergies.

However, India also remains underserved with low international seats per capita, signifying significant growth potential4. Air India has valuable slots and air traffic rights at domestic and international airports that are not available to Vistara. It is also the world’s third-largest aviation market.

Written by: William Trevan

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