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Air India-Vistara scrutiny ‘is good news for Gulf carriers’

Air India chief executive officer Campbell Wilson. The carrier was bought by Tata last year Reuters/Amit Dave
Air India chief executive officer Campbell Wilson. The carrier was bought by Tata last year
  • Airlines announced plans for a tie-up last November
  • Competition Commission of India concerned about a monopoly
  • UAE wants India to increase weekly number of available seats

An inquiry into the planned merger between Air India and Vistara will be welcomed by Middle East airlines, as they look to increase their share of the lucrative Indian market, an aviation expert has said.

India’s anti-trust commission is investigating the proposal over competition concerns, which could delay or even block the deal altogether.

Previously owned by the government, Air India was bought by Tata Group last year. The conglomerate announced plans in November to merge Air India with Vistara, which is a joint venture between Tata and Singapore Airlines.

The merged outfit aims to challenge local rivals such as IndiGo as well as the big carriers from the Middle East.

However, the Competition Commission of India has suggested the merger could lead to a monopoly on some routes and services, particularly in business class, sources told Reuters.

A duopoly could also arise: a merged Air India-Vistara and IndiGo would control more than 80 percent of the domestic market between them.

Linus Bauer, managing director of Dubai’s Bauer Aviation Advisory, said the deal would represent “a considerable challenge to Gulf carriers”.

“Both airlines have extensive networks within India, and their merger would have resulted in a combined fleet and network that could offer more routes and better frequency, potentially capturing a higher market share,” he told AGBI.

Air India placed an order for 470 jets in February as it seeks to build its international business by offering non-stop flights to destinations in the US.

At present, the bulk of India’s international air traffic is carried by Gulf airlines such as Emirates and Qatar Airways.

But the Indian government wants to recapture traffic lost to foreign carriers and is pushing airlines to order more widebody planes to meet demand.

For its part, the UAE is urging the Indian authorities to increase the maximum number of seats between the two countries by 50,000 a week, from about 65,000.

Emirates operates only wide-body A380s and B777s. It flies to nine Indian cities, operating 167 weekly flights. 

Kuwait’s Jazeera Airways also wants to increase its air traffic to India. It has asked for the current weekly allowance of 12,000 seats to be raised to 28,000.

Vistara and Air India both fly on international routes such as London and Dubai and would need competition clearances in other jurisdictions, according to the Reuters source.

Air India is waiting for the Indian inquiry to be concluded first, another source said. 

Last November Tata and Singapore Airlines said they expected the merger to be completed by March 2024.