Vistara-Air India merger: Final FDI approval expected soon, merger likely to happen after Diwali

The long-awaited merger of Vistara in Indian air is ready to move forward with final approval of foreign direct investment (FDI) Singapore Airlines (SIA) is expected to be approved as early as Saturday. This approval will allow SIA, which held a 49% stake in Vistara, to acquire a 25.1% stake in the merged airline with an investment of ₹2,059 crore. Tata Group will retain the remaining 74.9% stake in Air India.

According to a TOI report, all necessary approvals have been obtained from regulatory bodies including the Competition Commission of India (CCI) and the Directorate General of Civil Aviation (General Directorate of Customs and Customs Control), are already underway. Following the government’s FDI clearance, the merged entity is expected to announce the merger timelines to passengers, particularly those who have booked tickets on Vistara flights after the merger date. These passengers will be informed about the new Air India flight numbers and timings.

As sources told TOI’s Saurabh Sinha, the merger is likely to take place after Diwali, around November 1, to avoid any potential disruptions during the peak festive travel season. The period between after Diwali and the onset of winter fog, which usually begins around December 20, is considered an ideal period for the merger. This timing would allow the airline to address any initial merger-related issues before the complexities of winter weather add further challenges.

Vistara’s fleet of 70 aircraft will continue to operate in their current livery until they undergo thorough maintenance checks, at which point they will be painted in the new Air India livery. Some sources suggest that it is not practical to ground the aircraft solely for repainting, especially since Vistara aircraft offer a superior cabin product compared to Air India’s older aircraft.

The merger process has already seen some key developments, including the transfer of Vistara frequent flyer miles to Air India’s loyalty programme and the relocation of several Vistara employees to Air India’s new headquarters in Gurgaon. Concerns had been raised over the possible downgrading of Vistara passengers, such as those booked in business or premium economy classes, who would be moved to economy class in Air India flights due to limited availability in those classes. However, sources have assured that such cases will be rare.

Air India management had initially considered delaying the merger until its fleet was modernised, keeping Vistara as a premium product carrier in the meantime. However, this plan was dropped amid growing concerns from Vistara employees about key positions at the merged airline being filled by Air India officials. As a result, the merger is now slated to take place before the end of the year, even as Air India’s broader transformation remains a work in progress.

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