Final FDI approval expected soon, merger likely after Diwali, BA

The highly anticipated merger of Vistara into Air India is progressing with the final approval for foreign direct investment (FDI) from Singapore Airlines (SIA) expected imminently. This approval will allow SIA, with a 49% stake in Vistara, to acquire a 25.1% stake in the merged airline by investing INR 2,059 crore. The Tata Group will hold the remaining 74.9% stake in Air India.

According to a report by TOI, all necessary approvals from regulatory bodies, including the Competition Commission of India (CCI) and the Directorate General of Civil Aviation (DGCA), are already secured. Following the FDI clearance from the government, the merged entity is expected to announce merger timelines to passengers, particularly those with bookings on Vistara flights post-merger. These passengers will receive information about the new Air India flight numbers and schedules.

Sources informed TOI’s Saurabh Sinha that the merger is likely to occur post-Diwali, around November 1, to avoid disruptions during the peak festive travel season. The period between post-Diwali and the onset of winter fog, typically around December 20, is seen as an optimal window for the merger. This timing allows the airline to address any initial merger-related issues before winter weather complexities arise.

Vistara’s fleet of 70 aircraft will retain their current livery until undergoing major maintenance checks, after which they will be repainted in Air India’s new livery. Sources indicate that grounding aircraft solely for repainting is impractical, especially given Vistara’s superior cabin product compared to Air India’s older planes.

The merger process has witnessed key developments, including the transfer of Vistara’s frequent flyer miles to Air India’s loyalty program and the relocation of several Vistara employees to Air India’s new headquarters in Gurgaon. Concerns were raised about potential downgrades for Vistara passengers, such as those in premium classes, being moved to economy on Air India flights due to limited availability. However, sources assure that such occurrences will be minimal.Initially, Air India’s management contemplated delaying the merger until its fleet upgrade was complete, keeping Vistara as a premium carrier in the interim. This plan was abandoned amid concerns from Vistara employees about key positions being filled by Air India officials. As a result, the merger is now on track to proceed before year-end, while Air India’s broader transformation continues.