No adverse Impact on competition with Air India-Vistara Merger: Tata group tells CCI

New Delhi, 5th July 2023: Tata Sons-run domestic carriers Air India and Vistara have informed antitrust regulator Competition Commission of India (CCI) that a proposed merger of the two will not have a negative impact on competition because rivals are present on most routes that the combined business will operate.

According to insiders, the CCI’s decision to assess the Air India-Vistara merger will have no major business impact, but it may delay the process.

CCI has already served notice on the two airlines, asking for reasons why an investigation into the impact of the merger should not be launched.

According to competition legislation, the antitrust agency has the authority to conduct a comprehensive investigation before approving a merger or acquisition (M&A) if there are concerns about probable anti-competitive practises in the deal.

If the merger goes through, Air India will become the country’s largest international carrier and second-largest domestic airline. Air India, which was acquired by Tata Group last year, intends to revamp its fleet, operational systems, and revenue management.

ET quoted a source, “Anti-trust regulators around the world examine the impact on competition through an origin and destination (O&D) approach to identify relevant market… if we take a look at most busy markets, the combined entity of Air India, Air India Express and Vistara will have enough competition to restrain market power.”

The united Air India group will account for 49% of all flights on the Delhi-Mumbai route. IndiGo, India’s largest airline by market share, has a substantial presence on the route as well, accounting for 31% of total flights.

Similarly, on the Delhi-Bengaluru route, the Air India group will have a 52 percent share of total flights. According to the research, IndiGo has a 35% market share, citing data from aviation analytics firm Cirium.

According to the Air India group, the cost difference between a full-service and low-fare carrier is small because they fly from common airports and face similar expenditures such as fuel, landing, and parking fees.

A source stated, the CCI will conduct a thorough investigation to guarantee that the procedure does not face any challenges after the transaction is completed.