Singapore Airlines and the Tata group will merge their joint airline Vistara with Air India and thus consolidate the activities of India’s flagship airline privatised this year, the two companies said on Tuesday.
The deal, which is expected to close by March 2024, will see Singapore Airlines own 25.1% of Air India, after an additional investment of 20.6 billion rupees (241 million euros).
At present, Tata and Singapore Airlines respectively own 51% and 49% of full-service airline Vistara. The latter’s fleet will help expand Air India’s to 218 aircraft and make it the country’s second domestic airline after IndiGo.
Air India is already India’s largest international carrier but has only an 8.6% domestic market share. “The merger of Vistara and Air India is an important step in our quest to make Air India a truly world-class airline,” Natarajan Chandrasekaran, chairman of Tata Sons said in a statement.
In January, Tata bought for 2.4 billion dollars the public company Air India, nationalised in 1953 but initially founded in 1932.
Air India is aiming for a 30% market share in the Indian domestic market over the next five years and intends to rapidly expand its fleet to open more international routes. India is the third largest air transport market in the world and, according to Airbus forecasts, it is expected to grow by 6.2% annually over the next two decades.