The Competition Commission of India (CCI) has issued a show-cause notice to Air India, questioning the proposed merger with Vistara, as per a Mint report.

Merger Under Scrutiny

The Tata Group, which owns both airlines, has been given 30 days to respond to the notice and secure approval for the merger without an investigation. If the CCI decides to proceed with an investigation, Tata may have to divest its stake in Vistara or commit to guidelines that won’t harm competition in the aviation sector.

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Stake Distribution

Post-merger, Tata will own 51% of the total issued and paid-up equity share capital of the merged entity, and Singapore Airlines (SIA) will hold 25.1%. Tata has stated in its filing that the merger will not change the competitive landscape or have any adverse effect on competition in India.

Market Share

The merger was announced in November to compete with IndiGo, which holds a market share of over 60%. Air India and Vistara together have a market share of 18.4%, according to May traffic data. The government returned Air India, founded by JRD Tata in 1932 and nationalised in 1953, to the Tata fold in January 2022.

Singapore Airlines’ Stake

Contrary to media reports suggesting that Singapore Airlines may increase its existing 25.1% stake in Air India, the airline has dismissed these rumours, reaffirming its position declared in November 2022.

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