Air India and Vistara, both owned by Tata Group and set to be merged, have reportedly assured the Competition Commission of India (CCI) that their merger will not throttle competition.
What Happened? Both airlines have emphasized the presence of competitors on most routes to be operated by the merged entity, a source told the Economic Times.
The CCI’s review may affect the merger’s timeline but is unlikely to have a major business impact, the source added. The merger process has entered phase 2, which involved further discussions between the parties and the CCI.
Antitrust regulators assess competition by considering each origin and destination (O&D) market separately, the person told the business daily. The combined entity of Air India, Air India Express, and Vistara is expected to face enough competition in busy markets, limiting their market power, they added.
The Tata Group aims to merge Vistara into Air India, creating a single full-service airline. Singapore Airlines will hold a 25.1% stake in the new entity. Simultaneously, AirAsia India will likely merge with Air India Express to establish a single low-cost Air India subsidiary.
Data analytics firm Cirium finds that the merged entity would have 49% of total flights on the Delhi-Mumbai route, with IndiGo, currently India’s biggest airline, holding a 31% share. On the Delhi-Bengaluru route, the combined Air India group would have a 52% share, while IndiGo would hold 35%.
Among international sectors, the Air India group is estimated to have a significant advantage on the Delhi-Dubai route, accounting for 23% of total flights. Emirates, IndiGo, and SpiceJet also maintain a strong presence on this route.
The Air India group has emphasized to the commission that there are no business cost differences between full-service and low-cost airlines in India, the source said. They operate from the same airports and face similar costs such as fuel, landing fees, and parking charges. Following the merger, Air India would be the sole full-service airline operating in India.
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