Merger of Air India and Vistara won't have a negative effect on competition: Tata group

The domestic airlines Air India and Vistara, both owned by Tata, have informed the antitrust watchdog Competition Commission of India (CCI) that a proposed merger of the two won't have a negative effect on competition because rivals are present on most routes that the combined business will operate.

The CCI’s decision to review the Air India and Vistara merger will not have any material business impact, although it could delay the process, sources told ET.

Prior to this, CCI had sent notice to the two airlines asking them to provide justification for delaying the start of an investigation into the effects of the merger. In accordance with competition legislation, the antitrust agency has the authority to conduct a comprehensive investigation before approving a merger or acquisition (M&A) if there are questions about potential anti-competitive practices related to the deal.

Also, Watch: CCI issues show cause notice on Air India-Vistara merger deal

According to data analytics firm Cirium, the entity will have 49% of the total flights on the Delhi-Mumbai route. IndiGo also has a strong presence on the route with 31% of total flights. Similarly, on Delhi-Bengaluru, the second busiest, the combined Air India group will have 52% share of total flights. IndiGo has a 35% share.

If the agreement is finalised, Air India will overtake American Airlines as the second-largest domestic and international airline in the world. The fleet, operating systems, and revenue management of Air India, which the Tata Group acquired last year, are all in need of modernization.