Singapore Airlines eyes minority share in Air India group

Singapore Airlines (SIA) and Tata Sons (Tata) have agreed to merge Air India and Vistara, with SIA investing SG$360 million in Air India as part of the transaction. This would give SIA a 25.1% stake in Air India group with a significant presence in all key market segments. The merger is set to complete by March 2024.

According to a statement from SIA, through this transaction, SIA will reinforce its partnership with Tata and immediately acquire a strategic stake in an entity that is four to five times larger in scale compared to Vistara.  The merger would bolster SIA’s presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in a large and fast-growing aviation market.

The current CEO and managing director of Air India, Campbell Wilson, has also had long-standing ties with SIA that began in 1996. He has held roles such as president of sales and marketing for SIA and later on the CEO of Scoot, which is an SIA owned low-cost Airline. Wilson left the SIA brand in May this year to join the Air India team.

Moreover, the strategic move comes as India becomes one of the fastest growing global economies and is projected to become the third largest in the world by 2027, according to reports by Morgan Stanley. It is also the world’s third largest aviation market. Demand for air travel is surging with passenger traffic expected to more than double over the next 10 years, supported by rising income levels and ongoing investments in its aviation infrastructure.

Goh Choon Phong, the current chief executive officer, Singapore Airlines, said Tata Sons is one of the most established and respected names in India. “Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time,” he said. “With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.”

Goh added that SIA will work together to also support Air India’s transformation programme, unlock its significant potential, and “restore it to its position as a leading airline on the global stage.”

Natarajan Chandrasekaran, chairman, Tata Sons, said the merger of Vistara and Air India is an important milestone to make Air India a truly world-class airline.  He added that Air India is undergoing a transformation to provide “great customer experience, every time, for every customer”.

As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance, Chandrasekaran explained.

“We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes. We would like to thank Singapore Airlines for their continued partnership.”

Following its acquisition by Tata in January 2022, Air India unveiled a wide-ranging transformation programme to strengthen its foundations and revamp its operations, setting it on the road to recovery and positioning it for growth.

The release by SIA also stated thatAir India (including Air India Express and AirAsia India) and Vistara serve 38 international and 52 domestic destinations. It added that SIA intends to fully fund this investment with its internal cash resources, which stood at SG$17.5 billion as of 30 September 2022.

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