Amid growing concerns within the airline industry about a duopoly, Air India and Vistara, a joint venture between Tata and Singapore Airlines, are on the cusp of a potential merger. This raises the question of whether the combined entity will challenge local rival and market leader, IndiGo.
Campbell Wilson, Chief Executive of Air India, recently had talks with India’s antitrust chief, Ravneet Kaur, to discuss the ongoing merger process. This was requested by the company in the hopes of resolving the Competition Commission of India’s (CCI’s) concerns.
The issue, raised by CCI, is that the merged airline would have immense market power on many international and domestic routes. According to CCI’s initial review, the market share of the Tata Group could rise above 50% in at least seven domestic markets, reported Reuters.
Sharing his views on the impact of the merger, Vinod Kannan, CEO of Vistara said, “The Air India-Vistara merger is expected to receive all regulatory approvals by April 2024”.
IndiGo, in the first half of 2023, had a market share of 58%, while the Tata Group airlines, including AirAsia India, accounted for 25%. In the case of the merger, it could be that the market will see a duopoly, with a merged Air India-Vistara and IndiGo controlling more than 75% of the domestic market as smaller rivals such as SpiceJet and Go First struggle to compete.
Air India has yet to respond to CCI’s concerns raised. The airline industry waits to watch how this merger would impact local rivals such as IndiGo as well as the other smaller players.