Singapore Airlines and Tata are in talks about merging their two airlines in India; Air India and Vistara.
Vistara is coowned by Singapore Airlines (49%) and Tata (51%), while Air India is 100% owned by Tata.
Excerpt from the Straits Times:
Singapore Airlines has confirmed that it is in talks with India’s Tata Group over a potential merger of Vistara airline and the troubled national carrier Air India.
The confirmation comes amid Indian media reports that Tata, having completed its acquisition of a 100 per cent stake of Air India, was looking at merging it with Vistara.
It is unclear what stake, if any, SIA would have if Vistara merges into Air India, or whether fresh funds would be needed for the ailing Air India group.
SIA sees the Vistara stake as an integral part of its multi-hub strategy, giving it access to important sources that complement its strong Singapore hub.
It provides Vistara with operational and management expertise while Tata provides the corporate umbrella and domain knowledge in India.
Conclusion
Vistara was founded when Tata didn’t own any of Air India (it founded the airline in 1932 that was later nationalized), and Singapore Airlines hoped to expand past its Singapore hub.
It makes no sense for Tata to essentially own and operate two competing full-service airlines in India, and merging them would be rational action if Singapore Airlines decides to play along.
