Vistara merger: AI, Singapore Airlines to maintain minimum capacity on certain routes to address competition

Air India and Singapore Airlines will ensure minimum capacity on various domestic and international routes, including Delhi-Sydney and Delhi-Paris, as part of commitments made to fair trade regulator CCI to address possible competition concerns arising out of the Vistara merger.

Competition Commission of India (CCI), on September 1, approved the proposed merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1 per cent stake in Air India.

Certain competition concerns due to the proposed merger were raised by the watchdog and to address them, the airlines have given certain commitments with respect to the merger.

As per the commitments, Air India has voluntarily offered to maintain "minimum capacity/ supply level" on certain overlapping O&D (Origin & Destination) domestic and overseas routes.

They are Bhubaneshwar-Delhi, Bengaluru-Guwahati, Cochin-Delhi, Delhi-Thiruvananthapuram, Amritsar-Delhi, Bhubaneshwar-Mumbai and Bengaluru-Delhi in the domestic segment, according to a 73-page CCI order that has been made public.

The international routes where Air India will maintain minimum capacity/ supply level are Delhi-Sydney, Delhi-Melbourne, Delhi-Paris and Delhi-Frankfurt.

On these domestic and international routes, both Air India and Vistara operate flights.

Further, Air India and Singapore Airlines will maintain minimum capacity/ supply level in relation to certain overlapping O&D pairs between India and Singapore -- Delhi-Singapore, Mumbai-Singapore, Tiruchirappalli-Singapore and Chennai-Singapore.

"The Commission notes that the voluntary capacity commitments offered by the parties seem to address the likely competition concerns that could otherwise result from the proposed combination and thus decided not to proceed further with the investigation in the matter," the order, dated September 1, said.

The merger deal would mark a major consolidation in India's fast-growing aviation space.

Once the merger concludes, Singapore Airlines will be allotted additional shares in the merged entity through a preferential allotment. The deal will make Air India the country's largest international carrier and second-largest domestic carrier.

Air India Express and AIX Connect (earlier known as AirAsia India) are in the process of being merged.

Tata Group has four airlines -- Air India, Air India Express, AIX Connect and Vistara, in which Singapore Airlines has a 49 per cent stake.