Chennai: Indian aviation space will be left with one full-service carrier after Vistara’s merger with Air India gets completed on Tuesday. With the merger, 90 per cent share of the sector will be held by two players.
Vistara’s merger with Air India was announced on November 29, 2022, and was set to be completed on November 11, 2024. With the completion of the process, Air India group owned by the Tatas, will comprise Air India, AIX Connect and Vistara.
Full-service carrier Vistara, which started flying on January 9, 2015, was a joint venture between Tatas and Singapore Airlines. Singapore Airlines will hold 25.1 per cent equity interest in the Air India Group. It held a 49 per cent share in Vistara earlier. Tata had also bought out the shares of Air Asia in its joint venture in Air Asia India and renamed the carrier as AIX Connect.
Meanwhile, the concerns among a section of Air India pilots over the disparity in retirement age limits between Air India and Vistara seems to remain unresolved. The retirement age for pilots and other employees at Air India is 58 years, while it is 60 years at Vistara.
After the merger of Vistara, there will be only one full-service airline left in the market- Air India. There were five full-service carriers in the past decade. Budget airlines Indigo had earlier announced that it will be adding a few premium seats in its select flights.
While the aviation traffic is growing at around 15 per cent and new airports are getting added, the sector has witnessed increased consolidation. In the last few years, three Indian airlines -Kingfisher, Jet Airways and Go First went bankrupt. Even for Vistara, except for one quarter, profits remained elusive in almost a decade of operations. Except for Indigo, the aviation sector is running on heavy losses and holds huge debt.
Over 90 per cent of the market share is now held by Indigo and Air India. IndiGo's market share is 62 per cent and the Air India group has 29.2 per cent. Akasa Air has a share of 4.4 per cent and SpiceJet 4 per cent.
