Vistara-Air India merger: What you need to know about Tata Group’s big aviation deal

As the prospective Vistara-Air India merger approaches its final regulatory stages, Vistara's CEO, Vinod Kannan, confirmed on Monday that discussions have commenced regarding the integration of personnel across the two Tata Group carriers. While Kannan assured no significant staff cuts at Vistara due to the merger, he noted that role changes are likely, given the repositioning process that usually accompanies such consolidations.

Air India is concurrently working on unifying different sectors of its workforce, gearing up for a phased integration involving its own long-standing and newly joined employees, and subsequently, those from Vistara and AirAsia (India).

A quick overview of the deal

In a move strategically designed to bolster the Tata Group's position in India's aviation industry, Vistara - a venture jointly owned by the Tata Group and Singapore Airlines - is set to merge with Air India. This integration aims to create a force capable of standing tall against the current market leader, IndiGo. If all goes as planned and the necessary regulatory approvals are secured, the merger should see completion by April 2024. The deal comes after Air India was acquired by Tata Group in 2022, 69 years after the airline was nationalised by the Indian government. 

Key players in the Vistara-Air India merger

The merger aims to give birth to a robust aviation powerhouse that can snag a larger piece of the pie in India's expanding domestic flyers segment. By blending the strengths of both Vistara and Air India, the unified entity aims to turn the tide in its favour against rival market players, especially IndiGo. Post-merger, Singapore Airlines is slated to own a significant 25.1 per cent stake in the newly formed entity.

The Impact on staff and job security

While the merger is still awaiting the green light from regulatory bodies, conversations about integrating the staff of Vistara and Air India have already kicked off. Vistara's CEO, Vinod Kannan, has assuaged concerns about job security amid the merger, stating that although the integration might lead to some role shifts, there's no plan for staff downsizing at Vistara as a direct result of this merger.

Vistara has already started the preparation for merging its staff with Air India.

Valuation and future of the combined entity

As of now, the exact financial valuation of the Vistara-Air India merger remains cloaked in mystery, due to non-disclosure agreements and the delicate nature of such a business deal. However, considering Air India's vast infrastructure, large fleet; the Tata Group and Singapore Airlines' planned investments, experts suggest that the valuation could be quite significant.

The amalgamated airline is anticipated to evolve into a powerful player in the Indian aviation scene, boasting a combined fleet of nearly 140 aircraft. This augmented fleet is expected to offer extensive coverage of both domestic and international routes, thereby consolidating its stance against competitors like IndiGo. The newly formed airline is expected to fly under the Air India branding and name.