CCI clears Air India's acquisition of AirAsia India stake, helping merger

The Competition Commission of India approved Air India’s proposed acquisition of Tata group’s entire 83.67 per cent stake in AirAsia India. The approval gives a boost to the group’s plans of merging the two airlines.

At present, the Tata group owns and operates four airlines — Air India, Air India Express, AirAsia India, and Vistara. Air India and Vistara operate on both domestic and international routes. AirAsia India does not fly abroad, while Air India Express operates solely on international routes.

Air India and AirAsia have a combined market share of 13 per cent in India. While the group plans to merge AirAsia India with Air India Express (which is an Air India subsidiary), it has not taken a decision on bringing Vistara into its fold.

“Air India will be our flagship airline company…I do not want to comment on Vistara now, that will be taken care of at the right time. As of now we have not taken any decision on whether we want to have a single airline or two airlines,” Tata Sons Chairperson N Chandrasekaran said earlier this week.

A source said Air India’s acquisition of 83.67 per cent stake can take place upon receiving relevant approval from the civil aviation ministry. The Tata group is also expected to purchase the remaining 16.33 per cent stake from its Malaysian partner AirAsia Berhad after the ministry’s approval.

“The group has begun work on business integration and that is expected to crystalise in the next few months. It will also have to decide on branding.  The group is also discussing a code share agreement between AirAsia India and Air India, which would allow cross-selling of tickets. Fleet expansion is also being worked upon. The actual merger of two airlines could take up to a year as it would also require from the National Company Law Tribunal,” he said.