Singapore's Competition and Consumer Commission has granted conditional approval for the merger between Vistara and Air India, a joint venture between Tata Group and Singapore Airlines. The approval comes after 15 months of the merger announcement and aims to create a larger full-service airline in both domestic and international markets. Let's delve into the details of this conditional approval and the concerns it addresses.

Identifying Competition Concerns:

During its assessment of the merger, the Competition and Consumer Commission of Singapore identified specific competition concerns. It noted that the merging parties hold the majority of market shares for direct flights on four routes between Singapore and Indian cities: New Delhi, Mumbai, Chennai, and Tiruchirapalli. This raised concerns about potential monopolistic practices and limited competition in the market.

Addressing the Concerns:

To address the competition concerns, the merging parties submitted proposals to the competition watchdog. These proposals outline measures aimed at avoiding anti-competitive practices and ensuring fair competition in the market. The Competition and Consumer Commission of Singapore deemed these proposals sufficient to address the identified concerns, leading to the conditional approval of the merger.

Previous Approvals:

Prior to Singapore's conditional approval, the merger had received approval from the Competition Commission of India (CCI). The CCI approved Vistara's merger with Air India, along with the acquisition of a certain shareholding by Singapore Airlines (SIA) in Air India. However, the approval was subject to compliance with voluntary commitments offered by the parties involved.

The Tata Group's Expansion in the Aviation Market:

The Tata Group, in partnership with Singapore Airlines, entered the Indian airline market in 2013 with the launch of Vistara. In January 2022, the Tata Group further expanded its presence by acquiring Air India and Air India Express. The merger between Vistara and Air India, along with the integration of Air Asia India with Air India Express, aims to establish a unified full-service carrier, Air India, and a low-cost carrier, Air India Express.

Stake Dilution and Investment:

As part of the merger transaction, Singapore Airlines, which currently holds a 49% stake in Vistara, will dilute its stake and invest Rs 2,059 crore to acquire a 25.1% stake in the merged Air India. This strategic move aligns with the objective of consolidating Vistara with Air India by March 2024. 

By addressing the competition concerns and ensuring fair practices, the merger aims to create a larger and more competitive full-service airline in the Indian aviation market.