Air India-Vistara merger likely post-Diwali, airline awaits FDI approval

The much-awaited Air-India Vistara merger is expected to finalise after Diwali, around November 1, 2024. This time is generally considered an ideal time for mergers as it is the period following the Diwali-peak travel season and just before the onset of winter fog (around December 20). 

Hence the airline believes it will be able to resolve any initial issues before facing the additional challenges of winter weather conditions.

One last and final step before the merger is Singapore Airlines’ foreign direct investment (FDI) approval. The approval is expected to come by the end of this week, Times of India reported, citing sources. 

Mathrubhumi could not independently verify the report.

This FDI approval will enable SIA, previously holding a 49% stake in Vistara, to secure a 25.1% share in the merged airline by investing ₹2,059 crore. The Tata Group will retain the remaining 74.9% stake in Air India.

As of now all necessary regulatory approvals that are pre-requisite for merger like Competition Commission of India (CCI) and the Directorate General of Civil Aviation (DGCA), have already been obtained. 

After obtaining the FDI clearance, the airline will announce specific merger timelines to passengers who have booked Vistara flights beyond the merger date. 

The passengers will then receive updates on new Air India flight numbers and schedules. Meanwhile, the airline is not planning to immediately paint the Vistara fleet of 70 aircraft as it would be impractical given the passenger demand. 

Experts believe it does not make sense to immediately ground 70 aircraft just for re-painting work. The current Vistara fleet will continue fly in its current livery until the aircraft are scheduled for heavy maintenance, at which time they will be repainted in Air India’s new brand colours. 

Air India Group has already initiated various minor stages leading to the merger of two airlines like integration of Vistara’s frequent flyer miles into Air India's loyalty program and the relocation of several Vistara employees to Air India’s new headquarters in Gurgaon.