August 4, 2021

Tata Group Mulls Air India Buyout With Singapore Airlines

Air India is yet to confirm a new buyer amid its ongoing struggles

Air India is yet to confirm a new buyer amid its ongoing struggles. Photo: Getty Images

Source: Simple Flying
Author: Sumit Singh

Tata Sons is currently in discussions with Singapore Airlines (SIA) regarding a proposed bid for Air India. The group is looking to waive a non-compete clause and partner with the carrier through their existing venture Vistara.

Air India is yet to confirm a new buyer amid its ongoing struggles
Air India is yet to confirm a new buyer amid its ongoing struggles. Photo: Getty Images

Determined to advance Air India

The Economic Times shares that Tata has made a decision in principle to bid for the flag carrier of India. Even though Singapore Airlines will likely give its consent to the proposal, Tata may be ready to go ahead regardless, according to the report.

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Nonetheless, the two firms have seen success through existing full-service carrier Vistara. The airline only commenced operations five years ago but has already expanded well across the country and internationally. Meanwhile, Air India has been struggling with finances, and a new owner continues to be sought.

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Altogether, the government is said to be interested in having Tata take on Air India. With a strong backing of the group and SIA, the airline could be steered back in the right direction.

Tata and SIA’s joint initial joint venture has been performing well over the last half a decade. Photo: Getty Images
Tata and SIA’s joint initial joint venture has been performing well over the last half a decade. Photo: Getty Images

All under one carrier

A group director aware of the situation told the Economic Times that leadership feels that there needs to be a change within the aviation industry. Ultimately, the company believes that it makes sense for Vistara to take on the veteran airline.

“Our group chairman has clearly stated that the airline businesses have to be consolidated and there cannot be multiple airlines. So Air India being a full-service carrier, it is only sensible that it will come under the Vistara business which is a full-service carrier too,” the director told the Economic Times

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“So we are hopeful that our partner will be willing to participate in the future plans that includes Air India.”

A future incarnation of Air India could be under the operations of Vistara. Photo: Getty Images
A future incarnation of Air India could be under the operations of Vistara. Photo: Getty Images

Plenty to think about

The report highlights that unless SIA gives a waiver, a bid for Air India by Tata by itself could violate the stipulation that Vistara has an exclusive right to undertake “full-service carrier” operations within the aviation business of the group. Moreover, a bid by Vistara would require consent from Singapore Airlines and Temasek, which owns 55% of Singapore Airlines.

Altogether, if the deal goes through, it will give a new lease of life for the Indian national carrier. The airline has been struggling for years but has a strong presence across the country. So, a breath of fresh air could revolutionize the industry.

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