2024 TARGET...
the matter said.
“Air India is focusing on growing both its network and fleet, revamping its customer proposition, and enhancing safety, reliability and on-time performance. We are excited with the opportunity of creating a strong Air India which would offer both full-service and lowcost service across domestic and international routes,” said N Chandrasekaran, chairman of Tata Sons.
According to October data from the Directorate General of Civil Aviation, Tata group airlines hold a 25.9% market share. Indigo, run by Interglobe Aviation Ltd, is the largest airline with a 56.7% stake.
Consultant CAPA India expects Air India to gain strategic expertise, industry capabilities and access to capital through the partnership with Singapore Airlines.
“The competitive dynamics in India are moving towards a two-pillar system around the Air India group and Indigo. The two carriers combined are, in due course, expected to achieve a domestic market share of 75-80%. In the international market, they are expected to grow from 37.8% in Q2 FY23 to over 50%. This will redraw market and consumer power in the global arena back to Indian carriers, which has historically been dominated by foreign airlines,” CAPA India said.
In an exchange filing, Singapore Airlines said it would fund the cash component by way of its internal cash resources and pay it in a single tranche to Air India on completion of merger.
Singapore Airlines said it has taken into account the net asset value of Air India, Vistara, capital invested to date in Air India, Air India Express, Airasia India and Vistara, the precedent transactions in the aviation industry, including Tata Sons’ acquisition of three airlines in early 2022, as well as an assessment of the future financial and operating conditions of the merged Air India.
“With this merger, we have an opportunity to deepen our relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market. We will work together to support Air India’s transformation programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage,” said Goh Choon Phong, chief executive of Singapore Airlines.
The biggest concern regarding the merger is that there is no clarity regarding the board of the merged entity and the distribution of roles between Singapore Airlines and the Tata group, said Mark Martin, founder and CEO of Martin Consulting. He said there is also a worry regarding the restructuring of the workforce for some roles as Singapore Airlines may want to bring in more of its people.
The transaction for the merger will need approvals from the appropriate National Company Law Tribunal bench, anti-trust bodies from Singapore and India, RBI, the civil aviation ministry, and shareholders and creditors of both airlines. The deal may be completed by March 2024.