Tata Sons is eyeing to offer a stake in Air India to Singapore Airlines (SIA) as a part of the adjustment to merge Vistara with Air India. SIA owns a 49 per cent stake in Vistara’s parent company Tata SIA Airlines, a report by Economic Times (ET) added.
With the merger of Vistara and Air India, Tata Sons is aiming to keep only one airline brand under its ambit. The group currently owns a 51 per cent stake in Vistara.
After the merger, Air India will become India’s largest airline behind IndiGo. The company is also planning to merge other airlines under one brand, including AirAsia India, and Air India Express.
“Consolidating the three airlines — AirAsia, Vistara and Air India — would not only provide the Tatas with greater operational efficiency, but they will also be able to benefit from better bargaining power in their dealings with OEMs such as aircraft and engine manufacturers,” Vihang Virkar, partner at Lumiere Law Partners told ET.
Air India has a legacy of over 75 years and is a more dominant brand, the report added.
“With Vistara and AirAsia having recently commenced international operations, using the brand name ‘Air India’ would most certainly benefit them,” Virkar added.
N Chandrasekaran, Tata Sons chairman, had earlier stated that the group’s airline businesses are operating on thin margins, and must be consolidated to ensure operational efficiencies and keep control of costs.