The Competition Commission of India (CCI) has given its approval to the move, which is due to take effect subject to the voluntary commitments that the two airlines have made.
According to Reuters, the approval marks the end of a period of uncertainty in the Indian airline business, as CCI had expressed concerns about the potential formation of a duopoly, with Air India – Vistara and IndiGo controlling more than 75% of the domestic market and smaller rivals such as SpiceJet and Go First struggling to stay afloat.
“The Competition Commission of India has approved the proposed merger, ‘subject to compliance of voluntary commitments offered by the parties.’ We look forward to welcoming Air India and Vistara into the Tata fold,” said a Tata Group spokesperson.
The new entity will take on domestic rivals such as IndiGo and Middle Eastern carriers that dominate outbound traffic from India. Last month, the Tata Group unveiled a new logo, branding and plane livery for Air India, as part of a multi-million dollar transformation of the former state-run carrier.
Air India CEO Campbell Wilson said: “This is great news for the Indian aviation sector and will be a tremendous boost for the sector’s competiveness both domestically and overseas. With this merger, we are well placed to create a larger, more efficient airline that can better compete with international partners.”
The merged entity is expected to be launched later this year.