CCI to widen scrutiny of Air India-Vistara merger - Economic Times

Anti-trust regulator Competition Commission of India has decided to review merger of Air India and Vistara, which may potentially delay the process.

People aware of the development said that CCI has not given expedited permission to the process and have instead sent a notice to the two airlines seeking reason on why an investigation of the impact of the merger should not be conducted. “The process has moved to phase 2 which will entail more discussion between the parties and CCI,” an official of the anti-trust body said.

Phase 1 approval is given by CCI within 30 days if it finds that the transaction is unlikely to cause an adverse effect on competition. If the body forms an opinion that the merger or acquisition is likely to cause an adverse impact on the competition scenario in the sector it sends show cause notice on further review which may take up to 210 working days. On April 19, the Tata owned airlines Air India had approached for a merger.
The Tata group is merging Air India Express and AirAsia India to forma a low cost airline while Air India and Vistara combined will be its full service entity. The combined Tata airline entity with 218 aircraft flying 23.9 % of domestic and 23.10% share of international traffic to and from India will be the second largest domestic carrier behind IndiGo, which has more than 60% market share, and largest international carrier in India.

Spokesperson of the airlines didn’t comment on the issue.

While Tata Sons holds 51% in Vistara, the remaining 49% is owned by Singapore Airlines (SIA). After the merger, SIA will be holding a minority stake of 25.1% stake in the combined entity. The merger is aimed to be completed by March 2024 and will also see SIA investing Rs 5,020 crore in the combined entity as additional capital for FY 23 and 24.The CCI official quoted above said that m the concern is that the entity will be the sole operating Indian full service airline on domestic routes and a combined entity of Air India, Air India Express and Vistara will have a lion’s share of market on Gulf and Middle East route. Full service airlines as against low cost airlines offer a higher standard of service including complimentary inflight meals.However, a Tata group official said that there will be no adverse impact on the merger process. “ It may increase the time taken for the process but will not require any material change,” he said, adding that there is no business cost difference between a full service and low cost airline in India as they operate from a common airport and bear equivalent costs like charges on fuel, landing and parking.

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CCI to widen scrutiny of Air India-Vistara merger - Economic Times
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