India’s Tata Sons to merge Air India with Vistara airlines

NEW DELHI

India’s oldest and largest conglomerate, Tata Sons, will merge its Air India with Vistara, which it jointly runs with Singapore Airlines, in a major step toward revamping the country’s debt-laden national carrier.

The merger will strengthen Singapore Airlines’ foothold in India’s fast-growing aviation market, the company said in a statement. It is also expected to bolster the Tata Group’s competitive position in the market against the country’s dominant carrier, IndiGo.

Singapore Airlines is investing $250 million in Air India as part of the deal, giving it a 25.1 perceny stake in the group, with the rest owned by the Tata Group.

Both companies aim to complete the merger by March 2024, subject to regulatory approvals, Singapore Airlines said in its statement.

“We will work together to support Air India’s transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage,’’ Singapore Airlines’ CEO Goh Choon Phong said in the statement.

Air India is India’s largest international carrier and second largest domestic carrier. The merger is an ``important milestone’’ in its restructuring after Tata Sons regained ownership of it in January, said Tata’s chairman, Natarajan Chandrasekaran.

In taking over Air India, Tata absorbed about a quarter of its more than $8.2 billion debt burden.

Between them, Air India and Vistara have 218 aircraft serving 38 international and 52 domestic routes. The merger will make Air India the only carrier in the country with both full-service and low-cost passenger services.

IndiGo, a low-cost carrier founded in 2006, is India’s largest passenger airline with a market share of 56.7 percent as of October.