Singapore Airlines Secures FDI Approval For Air India-Vistara Merger: Completion By 2024-End

The proposed merger of Air India and Vistara has cleared a major hurdle. The Indian government has approved Singapore Airlines’ foreign direct investment proposal as part of the merger of Vistara with Air India.

Merger Completion Likely By 2024-End

The Air India-Vistara merger plan was announced in November 2022 and is expected to be completed by the end of this year. Once completed, the merger will create one of the world’s largest airlines and will result in Singapore Airlines acquiring a 25.1 per cent stake in Air India.

Currently, Tata Group owns Air India, while Tata and Singapore Airlines have a 51:49 joint venture called Tata SIA Airlines Limited, which operates Vistara.

Singapore Airlines’ Regulatory Filing

"The FDI approval, together with anti-trust and merger control clearances and approvals, as well as other governmental and regulatory approvals received to date, represent a significant development towards the completion of the proposed merger," Singapore Airlines said in a filing to the Singapore Stock Exchange on Friday.

In the regulatory filing, Singapore Airlines added that the completion of the merger continues to be subject to compliance with applicable Indian laws. It added that, at this juncture, the proposed merger is anticipated to be completed by the end of 2024.

Air India-Vistara Merger: Other Approvals

With the Indian government’s FDI approval for Singapore Airlines, the proposed merger has cleared most regulatory hurdles. In June 2024, the proposal was approved by the National Company Law Tribunal (NCLT) in India.

In March 2024, Singapore's competition regulator, CCCS, had given its conditional approval for the proposed merger. Prior to that, in September 2023, India’s competition watchdog, the Competition Commission of India (CCI), had given its nod to the proposed deal.

Tata-Singapore Airlines Partnership

Tata Sons and Singapore Airlines started working together in 2013 when they set up the aviation joint venture Tata SIA Airlines Limited. The JV started the airline Vistara, which commenced operations on 9 January 2015.

Tatas-SIA: A Long Association

Tata and Singapore Airlines had been trying to work together in the Indian aviation space for a long time. The two groups had tried to set up a full-service carrier together in India in the 1990s as well. However, they failed in that bid due to the regulatory framework of those times.

In 2012, the Indian government opened the domestic aviation sector for 49% foreign direct investment (FDI). Following this liberalisation of the FDI policy, Tata and SIA joined hands to set up a premium, full-service carrier in India.

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