Singapore Airlines Eyes Stake in Air India; Tie-Up With Tata Group Airlines Will Challenge Gulf Carriers

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Singapore Airlines is in talks with India's Tata Group as part of its long-term plans to increase its share in the Indian market. Singapore flag carrier believes an alliance with the airlines under the Tata conglomerate is strategically important ans Indian domestic and international air traffic flows are expected to double over the next decade.

The salt-to-software Tata Group now controls three airlines -- Air India, Vistara and Air Asia India. The Tata Group owns a 100 percent stake in Air India and its subsidiary Air India Express, 83.67 percent in AirAsia India and 51 percent in Tata SIA Airlines (Vistara).

A man walks past a Singapore Airlines signage at Changi Airport in Singapore

Singapore Airlines has a 49 percent stake in the Tata-controlled Vistara. SIA's current plan is to explore a deal under which Vistara, its joint venture with Tata, merges with the larger airline, Air India.

"In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India Ltd, a subsidiary of Tata (the 'potential transaction') .... The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India," Singapore Airlines said in a filing to the Singapore Stock Exchange.

SIA is basically exploring the conversion of its 49 percent stake in full-service carrier Vistara into a stake in Air India, the formerly Indian state-owned airline that Tata acquired recently.

Challenge to Gulf Carriers and IndiGo

"SIA converting its stake in Vistara into a stake for the Tata-led airline group makes sense ... The creation of this group will improve the position of all the Tata airlines and SIA's investment in the Indian market," independent Singapore-based analyst Brendan Sobie told Reuters.

If the plan gets through, SIA, one of the most reputed airlines in Asia, will get a strong foothold in the burgeoning Indian market. The report says that the combined entity will be big enough to give the Gulf carriers that have a near total monopoly over Indian international traffic. On the domestic front, the combined entity will give tough competition to IndiGo, the current market leader.

This article was first published on October 13, 2022