- India
- International
The Tata Group is set to commence the process of consolidating its entire airline business under a single umbrella — the Air India brand. The company has an indicative time limit of wrapping up the process by 2024.
At present, the Tata Group owns four airlines — Air India and its subsidiary Air India Express, plus a majority ownership in Vistara and AirAsia India.
Tata won a bid to own 100 per cent in Air India by paying Rs 18,000 crore — a substantial part was used for clearing the airline’s debt and Rs 2,700 crore was paid to the Union government in October last year. The airline was transferred by the government to the Tata Group in January this year.
Along with Air India, the group also acquired Air India Express, a fully-owned low-cost subsidiary of Air India that operates in the short-haul international space, and 50 per cent stake in ground handling company AISATS.
The Tata Group’s airline portfolio comprises 83.67 per cent ownership in AirAsia India and a majority 51 per cent holding in Vistara, with Malaysia-based AirAsia Berhad owning 16.33 per cent in the former and SIA owning 49 per cent in the latter. As part of the consolidation of its airline portfolio, the group has decided to fully acquire AirAsia India by buying out AirAsia Berhad’s stake for $30 million.
As part of the plan being discussed at multiple levels within the group, the consolidation process is likely to start with the merger of AirAsia India into Air India Express, and will be completed over the next 12 months.
Post this, the group is likely to look at an option of merging its full-service carrier Vistara into Air India, with the likelihood of Singapore Airlines (SIA) – an equity partner in Vistara – eventually partnering with the Tata Group to become part-owners of Air India as well.
The process of transfer will happen anytime soon, making AirAsia India the subsidiary of Air India. Soon after, the process will begin to merge AirAsia with Air India Express.
The integration process of the two airlines is expected to take at least 12 months from the start date.
Going ahead, the Tata Group plans to have one Air India brand with Air India Express as its low-cost subsidiary that will operate in low-cost domestic and international space.
How will the merger between AirAsia India and Air India Express proceed?
On the merger of Air India Express with AirAsia India, official sources in the know said it will start with integration of information technology and passenger booking system. The Air India Express system is likely to be moved to AirAsia India’s system, that is better in all aspects. Issues like cabin crew dress, branding (likely to be called Air India Express or something similar) are still being discussed at various levels. There are complexities since both airlines are different in terms of service, crew attire, etc.
As part of the plan, the airline will operate two types of aircraft: Air India Express’ Boeing 737 and AirAsia’s Airbus 320.
One of the plans being discussed is to shift all aircraft with AirAsia India to Air India Express.
Vistara is a 51:49 joint venture between the Tata Group and Singapore International Airlines. The Tata Group wanted SIA to join the Air India bid. SIA was willing until Covid-19 impacted its finances badly, making it back out.
By 2024, a decision will be taken on merging Vistara into Air India, and SIA would become part owners in Air India and the form (in terms of equity for SIA etc) will only be decided only at a later date, most likely in 2024.