Modi government clears final hurdle in Air India-Vistara merger
What's the story
The Indian government has approved a significant $276 million investment by Singapore Airlines, into the newly merged entity of Air India and Vistara.
This approval marks the final step in the merger process of these two airlines.
The integration, which includes combining aircraft, personnel, and routes, is expected to be finalized by year-end as per Singapore Airlines' recent filing with the stock exchanges.
Stake
Singapore Airlines to hold 25.1% stake in merged entity
Following the merger, Singapore Airlines, a joint owner of Vistara with Tata Group, will hold a 25.1% stake in the expanded Air India Group.
This move comes after 18 months of planning and negotiations.
The merger is part of a broader trend in the aviation industry that has seen several similar deals recently, including Air France-KLM's acquisition of a 19.9% share in SAS AB, and Deutsche Lufthansa AG's $360 million investment into Italy's ITA Airways back in July.
Market expansion
Merger to boost Singapore Airlines' presence in India
The merger between Air India and Vistara will significantly enhance Singapore Airlines' presence in one of the world's fastest-growing travel markets.
This deal will make it the only foreign entity with a substantial stake in an Indian airline.
The agreement also expands Singapore Airlines' influence beyond its smaller domestic market, which has been heavily reliant on international travel, a sector that suffered during the COVID-19 pandemic.
Information
A look at Singapore Airlines' tie-ups
In recent years, Singapore Airlines has wrapped up several tie-ups including joint-venture deals with Malaysia Airlines and Garuda Indonesia. The company is also eyeing a similar agreement with Japan's All Nippon Airways.