Tata Group to Integrate Four Airlines Under Air India - What Happens Now?

Singapore Airlines, half of Vistara, has said it's in "confidential talks" with Air India.

The Tata Group bought Air India in October 2021.

(Photo: iStock/ Altered by The Quint)

The Tata Group is considering integrating the four airline brands under its wings into one unit under Air India Limited, Bloomberg reported.

The details: The Tata Group is likely to integrate four airlines - Air India, Air India Express, Vistara, and AirAsia India under its Air India brand.

Why? Simple. Because, Air India is preparing for a substantial revamp. According to reports, Air India has ordered nearly 300 narrow-body jets, one of the largest commercial aviation purchases ever, with an aim to triple its fleet of 113 aircraft over the next five years.

Air India's Chief Executive Campbell Wilson was also quoted as saying that the fleet's expansion will include both wide and narrow-body aircraft.

How did they get here? The Tata Group was the winning bidder for the Air India group in October 2021, with an offer of $2.4 billion. Tata's purchase of Air India marked the largest privatization of a government-run and taxpayer-funded airline in India.

Why was Air India sold to a private entity?

• Air India spent years haemorrhaging money, landing itself in debt to the tune of over ₹15,000 crore, only staying alive because of taxpayer bailouts.

• The privatization of Air India was aimed at breathing life into the dying former giant of Indian aviation.

• The Tata Group paid ₹ 2,700 crore in cash and took over ₹ 15,300 crore of the airline's debt at the time, in October 2021.

According to Bloomberg, Air India is also in talks to raise at least $1 billion in funds, raising the airline's value to around $5 billion.

But, wait. While this happens, a merger is also expected of Vistara and Air India. Vistara is owned jointly by Tata and Singapore Airlines Limited (SIA). In a statement on 13 October 2022, SIA indicated that it was "in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India Ltd."

On 2 November, Air India had issued a statement that it had also acquired a 100 percent stake in AirAsia India, and would make it a subsidiary of Air India. That consolidation will likely happen by the end of 2023, according to reports.