Tata Group considers merging AirAsia, Vistara: Report

As the Tata Group gears to scale up its aviation business, the firm is currently considering a merger of budget airline AirAsia India with Vistara, according to a report by Mint.

Quoting official sources, the report stated that a decision is likely to be taken by March-end.

DH couldn't independently verify the report.

Tata group owns 51% of Vistara, with the rest held by Singapore Airlines (SIA). In case the potential merger of AirAsia India with Vistara to operate a single airline under the Vistara brand goes through, the Singapore Airlines (SIA) would also have to give its consent, the report added.

“It is not clear whether the conglomerate plans to run Air India as the third airline venture or would acquire it through Vistara or AirAsia India. But the combined presence of three airlines will give the group a great thumbs up, a great benefit,” corporate analyst Deepak Talwar told PTI.

Read: TCS buyback offer: Tata Sons tenders shares worth Rs 9,997 crore

Tatas operate two airlines — full-service carrier Vistara in partnership with Singapore Airlines, and budget airline AirAsia India in alliance with Malaysia's AirAsia Group. The salt-to-software conglomerate and US-based fund Interups Inc were among "multiple" entities that put in preliminary bids for buying loss-making carrier Air India.

AirAsia India reportedly widened its losses to Rs 332 crore during the April-June 2020 quarter, against Rs 15.11 crore loss during the corresponding period of the previous year. The aviation sector has been severely hit by the outbreak of the coronavirus pandemic that has resulted in lockdowns and suspension of commercial air services in various countries, including India.

The government is selling its entire 100 per cent stake in Air India that has been in losses ever since its 2007 merger with domestic operator Indian Airlines.

Tata Sons will increase its stake in budget carrier AirAsia India (AAI) to 83.67 per cent by acquiring an additional 32.67 per cent for $37.66 million from AirAsia Investment Ltd (AAIL). Currently, AAIL, which is a wholly-owned subsidiary of Malaysia-based AirAsia, holds 49 per cent stake in the Bengaluru-based AirAsia India.

Also read: Tata Sons to buy 32.67% stake in AirAsia India for Rs 275 crore

The Malaysian airline group joined hands with Tata Sons in 2013 to set up budget carrier AirAsia India after the then Manmohan Singh government allowed foreign airlines to invest up to 49 per cent in Indian carriers.

Bengaluru-headquartered no-frills AirAsia India remains a domestic player even after almost seven years of its launching services in the country. A successful bidder would win control of Air India's 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.

It would also get 100% of the low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports, the bid document showed.

(With agency inputs)