New Delhi: The Competition Commission of India (CCI) has approved the acquisition of entire shareholding in Air Asia India by Air India, paving the way for amalgamation among the four Tata group airlines.
The group plans to keep AI, which it took over as its flagship carrier this January, and merge low-cost airlines AirAsia India and AI Express. Vistara, Tata’s joint venture with Singapore Airlines, will continue with AI as a separate carrier.
“CCI has approved the acquisition of entire shareholding in AirAsia India, a wholly owned subsidiary of Tata Sons, in AirAsia India,” CCI tweeted on Tuesday.
“The proposed combination pertains to acquisition of entire equity share capital of AAIPL by AI, an indirect wholly owned subsidiary of Tata Sons Private Limited (TSPL). Presently, TSPL holds 83.67 per cent of the equity share capital of AAIPL. The proposed combination … deserves attention under the Competition Act, 2002,” says the notification to the CCI in this April.
AAIPL is a joint venture in which Tata holds 83.67% stake and AirAsia switches the remaining 16.33%.
“The proposed combination shall not alter the competitive landscape or cause any significant adverse effect on competition in India, irrespective of the respective markets as defined,” the April notification said.
Tata Sons has embarked on the task of consolidating four of its airlines through the proposed merger of Air India Private Limited (AAIPL) with Air India (AI) and bringing them under one roof into a seven lakh sq ft mega office. The work of bringing them together has started. Gurgaon.
While IndiGo continues to lead the domestic market with a share of around 54%, the AI-AAIPL combination will become the second largest personal airline with a domestic share of around 16%.
With Vistara (where 49% stakeholder Singapore Airlines is yet to agree to the merger with AI), Tata Airlines’ combined domestic stake will increase to around 25%.
The group’s fourth airline, AI Express, is primarily an international budget carrier connecting South India with the Gulf and Southeast Asia. AAIPL started operations in 2014, a year before the second Tata JV Vistara, and still does not have the right to fly abroad.
The Tata group has started taking steps to create greater synergy between its four airlines by shifting them to a mega office in Gurgaon, a suburb of Delhi. Working with Tata Realty, the group is finalizing its office requirement and plans to start the transition at the earliest.
“Considering the existing 4 (airlines) and one JV (AI-SATS) as part of the Tata fold, it has been decided to optimize resources, enhance team work and have high synergy at work, Various entities will move together. Premises in Gurgaon to start in a phased manner as far as possible. A new office space has already been identified on NH8, where we have the option to immediately lease up to 700,000 sq. ft. It is said in a communication sent to the heads of these five Tata aviation entities earlier this year.
“Now we need to finalize our exact location requirement and immediately start planning the transition to this new location. We are aiming to move forward in the next 2-3 months. For this purpose, a strategy plan has been developed. To do this, ED Headquarters Harpreet A D Singh has been tasked with the advisors of Ernst & Young,” it was added.
Entities have been asked to notify this team of their required office space “in a timely manner, to facilitate this strategic transformation and consolidation at the earliest”. This change will strengthen Gurgaon’s superiority in Indian aviation as it already has IndiGo and SpiceJet. Mumbai, which is the hub of airline headquarters, now has some relatively large airlines such as GoAir.
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